Dy CIT, Pune V. M/s KASTURI HOUSING P.LTD, Pune

ITA 1511/PUN/2013

• Counselvise Citation: 151124514 RSA 2013
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: V L JAIN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1511/PN/2013 (ASSESSMENT YEAR : 2006-07) DY.CIT, CENTRAL CIRCLE-1(2), PUNE .. APPELLANT VS. M/S. KASTURI HOUSING PVT. LTD., 842, BUDHWAR PETH, LAXMI ROAD, PUNE - 411002 .. RESPONDENT AABCK8478Q ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 13-08-2014 DATE OF PRONOUNCEMENT : 19-08-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30-05-2013 OF THE CIT(A)-I, PUNE RELATING TO ASSESSMENT YEAR 2006-07. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECTS AND TRADING IN SHARES. IT FILED ITS RETURN OF INCOME O N 22-11-2006 DECLARING TOTAL INCOME OF RS.6,85,375/- AFTER CLAIMING DEDUCT ION OF RS.2,03,34,309/- U/S.80IB(10) OF THE I.T. ACT. THE CLAIM OF DEDUCTION U/S.80IB(10) WAS IN RESPECT OF PROFITS AND GAINS OF THE PROJECT LA VIDA LOCA. THE ASSESSING OFFICER REFERRED TO THE ASSES SMENT PROCEEDINGS FOR A.Y. 2005-06 WHEREIN THE CLAIM OF DEDUCTION U/S .80IB(10) WAS 2 DENIED TO THE ASSESSEE FOR NOT COMPLETING THE PROJE CT BY 31-03-2008 SINCE THE LAYOUT WAS SANCTIONED BEFORE 01-04-2004. SIMILARLY, IT WAS NOTED THAT BUILT UP AREA OF FEW FLATS SOLD BY THE A SSESSEE EXCEEDED 1500 SQ.FT. AND THE PROJECT INCLUDED COMMERCIAL AREA IN EXCESS OF 2000 SQ.FT. SINCE THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IB(1 0) FOR THE SAME PROJECT, THEREFORE, THE ASSESSING OFFICER FOLLOWING HIS ORDER FOR A.Y. 2005-06 DENIED THE CLAIM OF DEDUCTION OF RS.2,03,34 ,309/-. 3. IN APPEAL THE LD.CIT(A) ALLOWED THE CLAIM OF DED UCTION U/S.80IB(10) BY OBSERVING AS UNDER : 3.6. I HAVE GIVEN CAREFUL CONSIDERATION TO THE SUBMISSI ONS AND ARGUMENTS OF THE APPELLANT AS, WELL AS THE CONTENTIONS RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE MAIN GROUNDS ON WHICH DEDUCTION U/S. 80IB(10) STAND DISALLOWED ARE ALREADY R EPRODUCED AT PARA 3.4 SUPRA. THE FIRST ISSUE RELATES TO THE FLATS EXCE EDING BUILD UP AREA OF 1500 SQ. FT. THE GENESIS OF THIS FINDING IS BASED ON THE ASSESSING OFFICER'S DECISION RELATING TO AY 2005-06 THAT THE BUILT UP AREA OF THE FLAT NO. A-601 IS 1152 SQ. FT. AND THE SAL EABLE AREA (AREA MENTIONED IN THE SALE DEED) IS 1661 SQ.FT. IT HAS BEEN ARGUED THAT THE DEFINITION OF BUILT UP AREA HAS BEEN BROUGHT IN TO T HE STATUTE BY THE EXPRESS PROVISIONS OF SECTION 80IB(14) BY THE FINANCE A CT (NO.2) 2004 WITH EFFECT FROM 1/4/2005 AND THAT THE PUNE BENCH O F ITAT IN D.S. KULKARNI DEVELOPERS LTD. VS ACIT IN ITA NO 1428/PN/20 08 HAS HELD THAT THE DEFINITION OF BUILT UP AREA AS INTRODUCED I N THE STATUTE WILL NOT APPLY TO THE PROJECTS APPROVED PRIOR TO THE DATE OF ITS INTRODUCTION, I.E., 1/4/2005. THE EXPRESSION WOULD HAVE TO BE UNDERSTOOD I N ACCORDANCE WITH THE RULES OF THE LOCAL AUTHORITY. IN THE PRESENT CASE SINCE THE SANCTIONED PLAN BY THE LOCAL AUTHORITY INDICATES THAT THE BUILT UP AREA IS LESS THAN 1500 SQ. FT., THE PROJECT WOULD QUALIFY FO R DEDUCTION. 3.7. THE NEXT ISSUE AS RAISED BY THE ASSESSING OFFICER IS RE GARDING ISSUE OF MERGER OF FLATS THEREBY LEADING TO THE COMBIN ED AREA OF SUCH MERGED FLATS EXCEEDING 1500 SQ.FT. THE APPELLANT'S CON TENTION IS THAT EACH OF THE UNITS WAS SANCTIONED AS INDEPENDENT UNIT, SO LD UNDER SEPARATE AGREEMENTS, SEPARATE COMPLETION CERTIFICATES O BTAINED, POSSESSION HANDED OVER SEPARATELY, MEMBERSHIP OF SOCIETY G IVEN INDEPENDENTLY AND EVEN MSEB METERS OBTAINED SEPARATEL Y FOR EACH FLAT (AS OBSERVED IN THE INSPECTION REPORT OF THE ITO WHICH IS REPRODUCED AT PARA 5.1. PAGE 9 OF THE ASSESSMENT ORDER FOR AY 2005-06). IN RESPECT OF THE IMPUGNED FLATS, IT IS SEEN FROM THE DETAILS FURNISHED BELOW BY THE APPELLANT THAT THE SALE DEEDS A ND POSSESSION LETTERS WERE REGISTERED/HANDED OVER TO THE PURCHASER M UCH BEFORE THE DATE OF PHYSICAL INSPECTION OF THE FLATS BY THE ASSE SSING OFFICER IN THE YEAR 2007: 3 FLAT NO. POSSESSION LETTER DATE SALE DATE A 603 A 604 17/07/2005 17/07/2005 24/07/2003 24/07/2003 C403 C 404 31/03/2003 31/03/2003 21/05/2002 21/05/2002 E101 E102 12/11/2003 12/11/2003 27/07/2002 27/07/2002 F 201 F 202 F203 27/03/2006 27/03/2006 27/03/2006 14/03/2005 14/03/2005 14/03/2005 THEREFORE THE MERE FACT THAT COMMON ENTRANCES WERE CREATED IN SOME OF THE FLATS DOES NOT GO AGAINST THE PROPOSITION THAT EACH OF THE FLAT WAS INDEPENDENT RESIDENTIAL UNIT. SINCE THE SECTION TALKS OF BUILT UP AREA AND NOT THE AREA PUT TO USE BY THE PURCHASER, THE S AME HAS TO BE UNDERSTOOD WITH REFERENCE TO THE PLANS APPROVED BY T HE LOCAL AUTHORITY. THE AMENDMENTS REGARDING DISQUALIFICATION U/S 80IB(10)(F) REGARDING PURCHASE OF RESIDENTIAL UNIT BY M ORE THAN ONE PERSON OF THE SAME FAMILY ETC. HAVE BEEN BROUGHT IN BY THE FINANCE ACT 2009 W.E.F. 1/4/2010. THE ISSUE HAS BEEN EXAMINED AND IS FOUND TO BE SQUARELY COVERED BY THE DECISIONS OF THE MUMBAI ITAT IN G.V. CORPORATION VS ITO AND PUNE BENCH DECISION IN ACIT VS K RUTI CONSTRUCTIONS CITED SUPRA, BOTH OF WHICH DECISIONS HAVE BEEN RELIED UPON BY THE PUNE ITAT IN THE APPELLANT'S OWN CASE FO R THE AY 2005-06. THE MUMBAI BENCH OF ITAT IN G.V. CORPORATION HAS CATEG ORICALLY HELD THAT IF EACH RESIDENTIAL UNIT DOES NOT EXCEED THE BUILT UP AREA OF 1000 SQ. FT. (1500 SQ.FT. FOR PUNE), DESPITE THE FACT THA T THEY WERE JOINED TOGETHER BY THE PURCHASER FOR BETTER LIVING OR FOR MO RE SPACE OR FOR ANY OTHER REASON, THIS WOULD NOT DISENTITLE THE ASSES SEE TO THE DEDUCTION U/S 80IB (10). CONSIDERING THE LEGAL POSITION ON THIS ISSUE, THE APPELLANT'S CLAIM IS FOUND TO BE WELL SUPPORTED. 3.8. THE NEXT ISSUE IS REGARDING COMMERCIAL AREA WHERE THE ASSESSING OFFICER HAS FOLLOWED HIS OWN ORDER FOR AY 2005-06 WHE REIN IT HAS BEEN OBSERVED THAT THE COMMERCIAL AREA COMPRISING OF SIX SHO PS IN BUILDING H ENCOMPASSES 2346 SQ. FT., WHICH WAS IN EXCESS OF MA XIMUM LIMIT OF 2000 SQ. FT. WHICH CONDITION WAS INTRODUCED INTO THE STA TUTE BY THE FINANCE ACT 2004 WITH EFFECT FROM 1/4/2005. THE ASSES SING OFFICER WAS OF THE VIEW THAT PRIOR TO 1/4/2005, COMMERCIAL ARE A WAS NOT AT ALL PERMISSIBLE TO A HOUSING PROJECT. ON THIS ISSUE THE HON' BLE MUMBAI HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES HAS CATEGO RICALLY HELD THAT, SUBJECT TO OTHER CONDITIONS BEING FULFILLED, UPTO 31/3/2005 DEDUCTION U/S 80IB(10) IS ALLOWABLE TO HOUSING PROJECT S APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH COMMERC IAL USER TO THE EXTENT PERMITTED UNDER THE DC RULES/REGULATIONS F RAMED BY THE RESPECTIVE LOCAL AUTHORITY. IN VIEW OF THE ABOVE DECISIO N OF THE JURISDICTIONAL HIGH COURT, THE VIEW OF THE ASSESSING OFFIC ER IS NO LONGER SUSTAINABLE AND THIS ISSUE IS ALSO DECIDED IN FAVOUR OF A PPELLANT. 4 3.9. THE LAST AND FINAL ISSUE RAISED IN THE IMPUGNED ORD ER RELATES TO THE COMPLETION OF THE HOUSING PROJECT. THE FACTS LEAD ING TO THE UNAVAILABILITY OF THE COMPLETION CERTIFICATE ALREADY STAN D DISCUSSED AT PARA 3.4 SUPRA AND ARE NOT IN DISPUTE. DURING THE COU RSE OF EARLIER HEARING BEFORE MY ID. PREDECESSORS, THE LEARNED AR H AS FILED VOLUMINOUS PAPERS EVIDENCING THE POSSESSION OF THE FLAT S IN BUILDINGS F AND G SUCH AS SALE AGREEMENTS, OCCUPANCY CERTIFICAT E, ELECTRICITY BILLS, MEMBERSHIP OF THE SOCIETY ETC. THE APPELLANT HAS RELIE D UPON THE GUJARAT HIGH COURT DECISION IN CIT VS TARNETAR CORPORAT ION IN TAX APPEAL NO. 1241/2011, MADRAS HIGH COURT DECISION IN CIT VS JAIN HOUSING AND CONSTRUCTION LTD. REPORTED IN 82 DTR 135(M ADRAS) AND JURISDICTIONAL ITAT DECISION IN RAMSUKH PROPERTIES VS DCI T IN ITA NO. 84/PN/2011. THE HON'BLE GUJARAT HIGH COURT IN CIT VS TARNETAR CORPORATION HAS DECIDED ON THE FACTS THAT CONSTRUCTIO N STOOD COMPLETED IN 2006 AND WELL BEFORE 31.3.2008 AND FLAT S WERE ALSO OCCUPIED BUT NO FORMAL BU PERMISSION WAS RECEIVED FROM THE LOCAL AUTHORITY ALTHOUGH THE SAME WAS APPLIED FOR, THAT IF S UBSTANTIAL COMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASE, THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NO T VITIATE THE VERY PURPOSE FOR WHICH DEDUCTION WAS BEING MADE AVAILAB LE. SIMILARLY THE MADRAS HIGH COURT IN CIT VS JAIN HOUSING AND CONSTR UCTION LTD. HAS HELD THAT SINCE THE SUBSTITUTION OF EXPLANATION TO CL. (A) TO SUB SEC. (10) OF SEC. 80 IB WAS INTRODUCED BY THE FINANCE ACT 2004 WITH EFFECT FROM 1/4/2005 IT IMPLIES THAT TILL 2005, THERE WAS NO R EQUIREMENT UNDER THE STATUTE DEALING WITH THE DATE OF COMPLETION OF HOUSING PROJECT. THEREFORE, THE COURT HELD THAT THE INSISTENC E BY THE REVENUE THAT THE CLAIM FOR DEDUCTION RESTED ON THE ASSESSEE'S PRODUCTION OF COMPLETION CERTIFICATE, WOULD BE DIFFICULT TO ACCEPT. IT IS ALSO/ SEEN THAT THE JURISDICTIONAL PUNE ITAT IN RAMSUKH PROPERTIES AND C ITY DEVELOPMENT CORPORATION ARE IN THE APPELLANT'S FAVOUR ON THIS ISSUE. ACCORDINGLY, ON THIS ISSUE ALSO, THE DECISION OF THE VAR IOUS JUDICIAL AUTHORITIES ARE TO BE ACCEPTED AND THE MATTER HAS TO BE DECIDED IN THE APPELLANT'S FAVOUR. 3.10 THUS, ON A CUMULATIVE CONSIDERATION OF THE FACTS ENUMERATED SUPRA AS ALSO THE PLETHORA OF JUDICIAL DECISIONS WITH RE GARDS TO THE LEGISLATIVE IMPORT OF THE PROVISIONS OF SECTION 80IB(10) AT THE RELEVANT POINT OF TIME, IT IS HELD THAT NONE OF OBJECTIONS RAISED BY THE ASSESSING OFFICER FOR DENYING THE APPELLANT BENEFIT OF SECTION 80 IB(10) CAN BE APPROVED. ACCORDINGLY, GROUND NO.1 IS ALLOWED. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80IB (10) OF THE IT AC T 1961 IN RESPECT OF ASSESSEE'S PROJECT 'LA-VIDA-LOCA' IGNORING THE FACT THAT THE ENTIRE HOUSING PROJECT FOR WHICH LAYOUT WAS SANCTIONED BEFORE 01/04/2004 WAS NOT COMPLETED AS ON 31/03/2008 AS NO TED BY THE ASSESSING OFFICER DURING THE COURSE OF SURVEY PROCEEDIN G. 5 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80IB(10) OF THE IT ACT 1961 IN RESPECT OF ASSESSEE'S PROJECT 'LA-VIDA-LOCA' IGNORING THE FACT THAT THE BUILT-UP AREA OF FEW MERGED FLATS SOLD BY THE ASSESS EE WAS EXCEEDING 1500 SQ. FT. AS NOTED BY THE AO AT THE TIME OF SURVE Y. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80IB(10) OF THE I T ACT 1961 IN RESPECT OF ASSESSEE'S PROJECT 'LA-VIDA-LOCA' THOUGH THE COMMERCIAL AREA IN THE PROJECT IS IN EXCESS OF 2000 SQ.FT. BY REL YING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BRAHM A ASSOCIATES WHICH IS APPLICABLE ONLY UPTO A.Y. 2004-05. 4. THE ORDER OF THE CIT (A) MAY BE VACATED AND THA T OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASS ESSING OFFICER IN THE INSTANT CASE, FOLLOWING HIS ORDER FOR A.Y. 2005-06, DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE I.T. ACT AMOUNTING TO RS.2,03,34,309/-. WE FIND THE ASSESSMENT ORDER FOR A.Y. 2005-06 WAS U PHELD BY THE CIT(A) AND ON FURTHER APPEAL THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFR ESH. FROM THE COPY OF THE ORDER DATED 28-03-2014 PASSED U/S.143(3) R.W.S. 254 OF THE I.T. ACT FOR A.Y. 2005-06, WE FIND THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) AMOUNTING TO RS.1,04,58,412/ - FOR A.Y. 2005-06 FOR THE SAME PROJECT. SINCE THE ASSESSING OFFICER FOLLOWING HIS ORDER FOR A.Y. 2005-06 HAS DISALLOWED THE CLAIM OF DEDUCT ION FOR THE SAME PROJECT AND SINCE THE ASSESSING OFFICER SUBSEQUENTL Y FOR THE SAME ASSESSMENT YEAR FOLLOWING THE DIRECTION OF THE TRIB UNAL HAS PASSED THE ORDER ALLOWING THE CLAIM OF DEDUCTION, THEREFORE, W E DO NOT FIND ANY 6 INFIRMITY IN THE ORDER OF THE CIT(A) ALLOWING THE C LAIM OF DEDUCTION U/S.80IB(10) FOR THE IMPUGNED ASSESSMENT YEAR. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED ORDER PASSED BY THE CIT(A) ON THIS ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE, THEREFORE, UPHOLD THE SAME. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19-08-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 19 TH AUGUST, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE