HARMONY ENTERPRISES, THANE V. DCIT CIR 2, MUMBAI

ITA 1516/MUM/2011

• Counselvise Citation: 151619914 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 03-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2011
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Additional evidence
• Section: 148; 143(3)

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 1516/MUM/2011 (ASSESSMENT YEAR: 2006-07) M/S HARMONY ENTERPRISES, 6, GURU ASRAY, KATRAP CHOWK, MIDC ROAD, BADLAPUR (EAST) 421 503, DIST THANE, MAHARASHTRA PAN: AACFH 1334 G VS DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -2, INCOME TAX OFFICE, RANI MANSION, MURBAD ROAD, KALYAN (WEST) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI LOVE KUMAR ! '#$ /DATE OF HEARING : 08-01-2015 %&' ! '#$ / DATE OF PRONOUNCEMENT : 16-01-2015 ) * ) * ) * ) * O R D E R PER VIVEK VARMA, JM: INSTANT APPEAL, HAVING A SOLITARY ISSUE IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)II, THANE, DATED 29.1 0.2010, WHEREIN, THE FOLLOWING GROUNDS HAVE TAKEN: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION CL AIMED BY THE APPELLANT U/S 80-IB(10) OF THE INCOME TAX AC T, 1961 AMOUNTING TO RS. 3,90,950/-. 2. THE APPELLANT PRAYS THAT DEDUCTION U/S 80IB(10) OF RS. 3,90,950/- BE ALLOWED. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR A LTER, DELETE AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. 2. THE BRIEF FACTS LEADING TO THE ABOVE ADDITION MADE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, ENGAGED IN THE ACTIVITIE S OF BUILDING CONSTRUCTION AND DEVELOPMENT. THE ASSESSEE START ED THE PROJECT IN THE PRECEDING YEARS, AND CONTINUED THE SAME IN THE CURRENT YEAR, IN THE NAME OF GURU CHHAYA, WHICH CONSISTED O F 'A M/S HARMONY ENTERPRISES ITA 1516/M/2011 2 TO M WINGS AT BADLAPUR, THANE. THE PROJECT HAS BEEN APP ROVED BY THE LOCAL AUTHORITY, BADLAPUR MUNICIPAL COUNCIL (LOCAL AUTHORITY). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO WHILE VERIFYING THE PLANS OF THE PROJECT, OBSERVED THAT TH E HOUSING PROJECT OF THE ASSESSEE DID NOT COMPLY WITH THE BASIC CONDITION OF THE PROJECT, I.E. ON A PLOT HAVING MINIMUM AREA O F ONE ACRE. ACCORDING TO AO, AFTER GOING THROUGH THE APPROVED PLAN AND MAPPINGS, AS APPROVED BY THE LOCAL AUTHORITIES, THE P ROJECT OF THE ASSESSEE IS ON FRAGMENTED PIECES OF LANDS. THE PLOTS ON WHICH THE HOUSING PROJECT OF THE ASSESSEE IS CONSTRUCTE D IS NOT ON A PLOT OF LAND HAVING AN AREA OF ONE ACRE. SIMILARLY, IN TH E CASE OF PHASE 2 OF THE HOUSING PROJECT THE CONSTRUCTION IS MADE ON PLOT NUMBERS 1, 2, 3 AND 34, 35, 36, 37 AND THE ASSE SSEE DOES NOT OWN PLOT NUMBERS 4 AND 5 IN BETWEEN AND THER EFORE THE AREA OF PLOT NUMBERS 1,2,3 CANNOT BE CLUBBED WITH THE PLOT NUMBERS 6 TO 11. IN RESPECT OF THE PLOT NUMBERS 34, 35, 36 & 37, THE AREA CANNOT BE CLUBBED WITH OTHER PLOTS AS THE SAME ARE SEGREGATED BY PLOTS IN BETWEEN WHICH ARE NOT OWNED BY THE ASSESSEE. 3. THE ABOVE FACTS WERE CONFRONTED TO THE ASSESSEE BY THE AO AND IN RESPONSE TO THAT THE ASSESSEE VIDE LETTER DATED 16/10/208 SUBMITTED THAT IF A HOUSING PROJECT IS DEVELOPED ON TOTAL LAND AREA OF MORE THAN ONE ACRE, EVEN IF MORE THAN ONE PLOTS ARE CLUBBED TOGETHER AND APPROVAL IS GRANTED BY THE LOCAL AU THORITY TREATING IT AS ONE SCHEME, IT SATISFIES THE CONDITION OF ONE ACRE. EVEN IF THERE IS A GAP BETWEEN SOME PLOTS BUT THEY ARE IN PROXIMITY SO THAT IT CAN BE EASILY IDENTIFIED AS ONE PROJE CT AND IF THEY ARE APPROVED BY LOCAL AUTHORITY AT THE SAME TIME T REATING THEM AS ONE SCHEME, THEY DESERVES TO BE TREATED AS FU LFILLING THE CONDITION OF SECTION 80IB(10). 4. THE AO DID NOT AGREE WITH THE ABOVE ARGUMENTS. ACC ORDING M/S HARMONY ENTERPRISES ITA 1516/M/2011 3 TO AO, THE PLAIN READING OF THE CLAUSE (B) OF SECTION 80IB(10 ) MAKES IT ABUNDANTLY CLEAR THAT THE PROJECT SHOULD BE O N A MINIMUM AREA OF A PLOT OF ONE ACRE AND NOT THE AGGREGATE AREA OF DIFFERENT PLOTS USED FOR THE PROJECT. IN THE INSTANT CAS E THE ASSESSEE HAS TAKEN BUNCH OF PLOTS IN THE SAME SURVEY N UMBERS BUT EVEN THIS BUNCH DOES NOT CONSIST OF SUCCESSIVE PLOTS AND IN BETWEEN PLOTS ARE OWNED BY OTHER PERSONS. EVEN AFTER B UNCHING THESE PLOTS IT DOES NOT FORM ONE PLOT OF ONE ACRE AND TH E ENTIRE AREA OF THE PROJECT IS IN FRAGMENTED FORM, THEREFORE THE ASSESSEE HAS NOT FULFILLED THE CONDITION PRESCRIBED AT CLAUS E (B) OF SECTION 801B(10). IN VIEW OF THE SAME THE AO DISALLOWED T HE DEDUCTION UNDER SECTION 801B(10) TO THE ASSESSEE AMOUNTI NG TO RS.3,90,950/-FOR THE YEAR UNDER CONSIDERATION . 5. THE AO, THEREFORE, REJECTED THE CLAIM OF DEDUCTION U/S 80IB(10) BY THE ASSESSEE. 6. THE ASSESSEE APPROACHED THE CIT(A), BEFORE WHOM, THE ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE AO. T HE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, SUSTAINED THE DISALLOWANCE AS MADE BY THE AO. 7. AGAINST THIS DISALLOWANCE, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 8. BEFORE US, THE AR SUBMITTED THAT THE BASIS FOR REJECTIN G THE CLAIM OF DEDUCTION U/S 80IB(10) HAS BEEN TAKEN BY THE REVENUE AUTHORITIES, IS THAT THE PLOT OF LAND WAS LESS THAN 1 ACRE. 9. ON THE CONTRARY, THE AR SUBMITTED THAT THE PLOTS OF LA ND AGGREGATED WAS 6,880.40 METERS, WHERE, EVEN THE FSI AVA ILABLE WAS ALLOWED ON FULL, I.E. 6,880.40 METERS. 10. TO PROVE THIS FACT, THE AR PRODUCED BEFORE US THE SA NCTION PLAN AS SUBMITTED BEFORE THE KULGAON BADLAPUR MUNICIPAL / M/S HARMONY ENTERPRISES ITA 1516/M/2011 4 COUNCIL & SUBMITTED THAT THE AREAS MARKED FOR ROADS COU LD NOT BE EXCLUDED FROM THE AREA WHERE THE PROJECT IS BEING DEVELOPED. 11. CITING THE CASE OF ITO VS RAJ RESIDENCY PVT LTD, ITA NO. 6245/MUM/2012 (WHERE ONE OF US WAS A PARTY), SUSTAINED THE ORDER OF THE CIT(A), WHEREIN THE CIT(A) ALLOWED THE DEDUCTION U/S 80IB(10), REVERSING THE DECISION OF THE AO. 12. THE AR ALSO CITED THE CASE OF ITO VS VIDHI BUILDERS, IT A NO. 2554/MUM/2011, WHEREIN THE COORDINATE BENCH AT MUMBAI, ACCEPTED THAT ROADS, SET BACK AND RECREATIONAL A REAS TO BE INCLUDED TO MAKE IT 1 ACRE PLOT. IN THIS CASE AS WELL, TH E DISPUTE REVOLVED AROUND THE AREA OF PLOT AND THE ITAT FO UND THAT THE PLOT AREA AFTER TAKING INTO CONSIDERATION ROADS AND RECREATIONAL AREAS SHALL BE EXCEEDING ONE ACRE, WHICH, IN TH AT CASE WAS 4,600 SQ. MTS. AND EVEN AFTER REDUCING THE DISP UTED POINTS RAISED BY THE AO, CAME TO 4,189 SQ. METERS. THE COORDINATE BENCH ALLOWED THE DEDUCTION. SIMILAR VIEWS WERE TAKEN IN THE CASE OF ACIT VS ANJANA S CHAVAN, ITA NO. 1080/MUM/2010 AND IN THE CASE OF ACIT VS DHARESHWAR PROMOTERS & BUILDERS, ITA NO. 820/PN/2011. 13. THE AR ALSO SUBMITTED THAT IN ASSESSMENT YEARS 2003 -04 AND 2005-06 THE DEDUCTION HAD BEEN ALLOWED U/S 143(3) ASSESSMENTS AS FRAMED BY THE AO. 14. THE AR ALSO STATED ON BAR THAT THOSE ASSESSMENT H AVE NOT BEEN REOPENED U/S 148 AND THAT THEY ARE NOW FINAL. 15. THE AR, ON THESE SUBMISSIONS PLEADED THAT DISALLOWANCE AS MADE BY THE AO IS NOT CALLED FOR. IN ANY CASE, THE AR HAS SUBMITTED CERTAIN PAPERS AS ADDITIONAL EVIDENCE AS WELL, PERTAINING TO MEASUREMENTS OF THE PLOT ON WHICH THE PROJ ECT IS BEING DEVELOPED FROM THE PRECEDING YEARS. M/S HARMONY ENTERPRISES ITA 1516/M/2011 5 16. THE DR PROCEEDED ON THE ARGUMENTS OF THE REVENU E AUTHORITIES AND SUBMITTED THAT FRAGMENTED PLOT COULD NOT BE AGG REGATED TO FULFILL THE CONDITION FOR THE CLAIM OF THE DEDUCTION. THE D R SUBMITTED THAT SINCE THE PLOTS WERE FRAGMENTED, THE CONDITIONS AS PRESCRIBED IN THE RELEVANT PROVISIONS OF THE ACT, CANNOT BE HELD TO B E COMPLIED WITH, SPECIFICALLY, AND THAT THE AREA OF THE PROJECT, SHO ULD BE IN EXCESS OF ONE ACRE. 17. THE DR, THEREFORE, SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 18. WE HAVE HEARD THE ARGUMENTS AND HAVE PURSUED TH E MATERIAL ON RECORD AND THE SUPPOSED ADDITIONAL EVIDENCE, EVIDENCING THAT THE PROJECT WAS UNDERTAKEN ON PLOT SIZE OF 1 ACRE OR MO RE. 19. THESE DOCUMENTS BEING PRODUCED NOW, ARE NOT BEI NG CONSIDERED BY US. THIS IS BECAUSE, THE PROJECT BEING DEVELOPED ON PLOT SIZE EXCEEDING ONE ACRE IS APPARENT AND EVIDENT AND ACCE PTED BY THE AO IN HIS ORDER, WHEN HE DESCRIBES PHASE I AND II ON PAGE 2. WE FIND THAT IN PHASE I THE AREA AS PER REVISED PLAN AGGREGATED TO 4,088.50 SQ. MTS. AND PHASE II AGGREGATED TO 2,791.90 SQ. MTS. BOTH P HASES AGGREGATE TO 6,880.40 SQ. MTS., WHICH IS DEFINITELY IN EXCESS OF 1 ACRE, (1 ACRE IS 4,000 SQ. MTS.), WHICH HAS BEEN BROUGHT IN SIMPLIFI ED WAY AND AS PER CERTIFICATE OF THE ARCHITECT, AS ADDITIONAL EVIDENC E. SINCE THE AO HAS ACCEPTED THE AREA AS 6,880.90 SQ. MTS. IN THE ASSES SMENT ORDER ITSELF, WE DO FIND ANY NEED FOR ADMITTING OR PURSUING THE A DDITIONAL EVIDENCE. 20. THE OTHER ISSUE RAISED BY THE DR IS THAT THE AMENIT IES SHOULD BE EXCLUDED TO COMPUTE 1 ACRE. WE HAVE GONE TH ROUGH THE PLAN AND SEEN THAT THE PLOT SEEMS TO BE FRAGMENTED BECAUSE OF ROADS AND RECREATIONAL AREAS. THESE ISSUES HAVE BEEN CONSISTENTLY DECIDED IN FAVOUR OF THE ASSESSEE BY THE CI T(A) AS WELL AS BY THE ITAT THAT DP ROADS AND RECREATIONAL ARE AS HAVE TO BE INCLUDED WHILE CONSIDERING THE CLAIM OF DEDUCTION U/S 80IB(10). IN ANY CASE, THE RELEVANT PROVISION SAYS THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE M/S HARMONY ENTERPRISES ITA 1516/M/2011 6 ACRE . NOWHERE DOES IT SAY THAT EACH BUILDING, BUT IT TALKS ABO UT THE PROJECT. THE PROJECT WAS GURU CHHAYA HAVING A TO M WINGS, WHICH WAS ON 6,880.90 SQ. MT. LAND WHICH, AS PER DEVELOPMEN T PLAN CONSISTED OF ROADS AND RECREATIONAL AREAS. 21. NOWHERE IN THE ORDERS OF THE REVENUE AUTHORITIES THE RE HAS BEEN EVEN A WHISPER THAT THE PROJECT THOUGH FRAGMENTE D LAND WERE DIFFERENT PROJECTS, BECAUSE PHASES I & II HAD REC EIVED APPROVAL ON 12.04.2001 (AO PAGE 2). THIS CLEARLY SHOWS TH AT THE SANCTION WAS ALLOWED BY THE LOCAL AUTHORITIES, FOR THE PROJE CT HAVING AREA OF PLOTS, WHICH AGGREGATED TO 6,880.90 SQ.MTS. 22. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT TH E REVENUE AUTHORITIES ERRED IN DENYING THE DEDUCTION U/S 8 0IB(10) AS CLAIMED. THE DENIAL, ACCORDING TO US IS AGAINST THE PRECEDENTS, BECAUSE IN THE IMMEDIATE PRECEDING YEAR, THE DEDUCTION HAS BEEN ALLOWED BY THE AO U/S 143(3) ON THE P ROJECT WHICH IS COMING FROM ASSESSMENT YEAR 2002-03, CONTINUING IN THE CURRENT YEAR AND GOING INTO THE NEXT YEAR. 23. WE, THEREFORE, SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND DIRECT THE AO TO ALLOW THE DEDUCTION AS CLAIMED. 24. APPEAL IS THEREFORE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2015. SD/- SD/- ( ) ( ) $ $ $ $ )- )- )- )- )- )- )- )- (R C SHARMA) ( VIVEK VARMA ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 16 TH JANUARY, 2015 '/ COPY TO:- M/S HARMONY ENTERPRISES ITA 1516/M/2011 7 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT(A)-II, THANE. 4) THE CIT -III, THANE. 5) . /0 ' H , , / THE D.R. H BENCH, MUMBAI. 6) 012 3 COPY TO GUARD FILE. )* / BY ORDER / / TRUE COPY / / 4 / 5 6 , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * *CHAVAN, SR.PS