ACIT, Pune V. M/s RAMSUKH PROPERTIES, Pune

ITA 1516/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84847 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: P DANIEL
• Keywords: Business income; Reasonable cause
• Section: 80IB; 2

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. 1516/PN/2013 (ASSESSMENT YEAR : 2010-11) ACIT, CIRCLE-2, PUNE .. APPELLANT VS. M/S. RAMSUKH PROPERTIES, D-BUILDING, SIDDHESHWAR NAGAR, AIRPORT PORT, VISHWANTWADI, PUNE 411015 .. RESPONDENT PAN NO.AAHFR6007R ASSESSEE BY : SHRI P. DANIEL 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 15-04-2013 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION AS BUI LDERS AND PROMOTERS. IT FILED ITS RETURN OF INCOME ON 23-09-2010 DECLARI NG TOTAL INCOME OF RS.3,12,41,280/-. FOR THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS DERIVED INCOME FROM CONSTRUCTION OF RESIDENTIAL PRO JECT AT VISHRANTWADI, PUNE. IN RESPECT OF THIS PROJECT, TH E ASSESSEE HAS TREATED SOME PORTION OF THE PROJECT AS ELIGIBLE FOR CLAIMIN G DEDUCTION 2 U/S.80IB(10) AND THE BALANCE PORTION AS NOT ELIGIBL E FOR CLAIMING DEDUCTION U/S.80IB(10). FROM THE SEPARATE TRADING PROFIT AND LOSS ACCOUNT AND THE PORTION CLAIMED TO BE ELIGIBLE U/S. 80IB(10) ON TOTAL SALES OF RS.4,17,97,475/-, THE ASSESSEE HAS SHOWN P ROFIT OF RS.2,51,11,918/-. FOR THE INELIGIBLE PORTION THE A SSESSEE HAS DECLARED TOTAL SALES OF RS.6,15,00,300/- AND HAS SHOWN PROFI T OF RS.3,19,40,948/-. 2.1 THE ASSESSING OFFICER, DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, ASKED THE ASSESSEE TO EXPLAIN THE CLAI M OF DEDUCTION OF RS.2,52,67,198/- U/S.80IB(10) OF THE I.T. ACT. HE NOTED THAT THIS DEDUCTION HAS BEEN CLAIMED IN RESPECT OF THE PROJEC T AT VISHRANTWADI, WHICH COMPRISED OF SIX BUILDINGS HAVING 205 FLATS. THIS PROJECT WAS COMMENCED VIDE COMMENCEMENT CERTIFICATE NO.3837/04 DATED 13-01-2005 AND THEREFORE THE ASSESSEE WAS SUPPOSED TO COMPLETE THIS PROJECT BY 31-03-2008. HOWEVER, BY 31-03-2008 THE ASSESSEE WAS ABLE TO OBTAIN COMPLETION CERTIFICATE ONLY IN RESPE CT OF 173 FLATS. HE NOTED THAT SIMILAR CLAIM OF THE ASSESSEE WAS DENIED TO IT DURING A.YRS. 2007-08 AND 2008-09. HE, THEREFORE, ASKED THE ASSE SSEE TO SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S.80IB(10) FO R THE IMPUGNED ASSESSMENT YEAR. IT WAS BROUGHT TO THE NOTICE OF T HE ASSESSING OFFICER THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS SET-AS IDE THE ORDER OF THE CIT(A) AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S.80IB(10). HOWEVER, THE ASSESSING OFF ICER NOTED THAT THE DECISION OF THE TRIBUNAL FOR A.Y. 2007-08 HAS N OT BEEN ACCEPTED BY THE DEPARTMENT AND A FURTHER APPEAL HAS BEEN FILED BEFORE THE HONBLE 3 HIGH COURT. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND RELYING ON VARIOUS DECISIONS THE ASSESSING OFFICER REJECTED THE CLAIM OF DEDUCTION OF RS.2,52,67,198/- U/S.80IB(10) OF THE I .T. ACT. 3. IN APPEAL THE LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER : 3.2 I HAVE CONSIDERED THE SUBMISSION FILED BY TEH APPE LLANT AND MATERIAL AVAILABLE ON RECORD. THE APPELLANT HAS FIL ED EIGHT GROUNDS AND THE CONTENTION RAISED IN GROUNDS OF APPEAL NO.1 TO 6 ARE IN RESPECT OF THE DISALLOWANCE OF CLAIM FOR DEDUCTION OF RS.2,52 ,57,198/- U/S.80IB(10) ON THE GROUND THAT ALL 205 FLATS PLANNED IN THE PROJECT WERE NOT COMPLETED WITHIN THE TIME STIPULATED UNDER THE SECTION. THE APPELLANT PLEADS THE CLAIM TO BE LEGITIMATE AND CONTENDS THAT THE A.O. FAILED TO APPRECIATE THAT THE PRINCIPLE OF PRO RATE IS AN ESTABLISHED PRINCIPLE OF LAW AS HELD IN PLETHORA OF CASES BY DIFFE RENT COURTS. DURING THE YEAR THE APPELLANT HAS SOLD 12 FLATS WHICH ARE PAR T OF THE 173 FLATS FOR WHICH THE 80IB(10) DEDUCTION HAS BEEN CLAIMED O F RS 2,52,67,198/- 3.3 HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CA SE AND SUBMISSION, THE APPELLANT'S CASE IS FOUND TO BE SQUARELY COVERED BY THE DECISION OF THE ITAT PUNE WHICH WAS DULY CONSIDERE D WHILE ADJUDICATING THE MATTER IN APPELLANT'S CASE FOR A.Y. 2009-10 THE OPERATIVE PORTION OF THE HON'BLE ITAT, PUNE'S ORDER DATED 25.07.2012 IN APPELLANT'S OWN CASE FOR A.Y. 2007-08. 5. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS A FIRM ENGAGED IN BUSINESS OF BUI LDER AND PROMOTER. THE ISSUE BEFORE US IS REGARDING ALLOWABILIT Y OF DEDUCTION U/S. 80IB(10) OF THE ACT ON PARTIALLY COMPLETE PROJE CT. THE ASSESSING OFFICER HAS DENIED THE DEDUCTION ON THE GROUND THAT PROJECT WAS NOT COMPLETE WITHIN THE STIPULATED TIME. THERE IS NO DISPU TE WITH REGARD TO OTHER CONDITIONS LAID U/S.80IB(10) OF THE ACT, I.E ., COMMENCEMENT OF PROJECT, AREA OF LAND OF PROJECT, ETC. ASSESSEE'S HOUSING PROJECT WAS APPROVED VIDE COMMENCEMENT CERTIFICATE NO.3837/04 D ATED 13.01.2005 OUT OF WHICH COMPLETION CERTIFICATE WAS O BTAINED AND FURNISHED BEFORE THE ASSESSING OFFICER FOR 173 OUT OF 20 5 FLATS. SAME WAS REJECTED BY THE ASSESSING OFFICER AND CONFIRMED BY T HE CIT(A). THE REQUEST FOR GRANTING WHOLE DEDUCTION IN RESPECT O F WHOLE PROJECT HAS RIGHTLY BEEN REJECTED BECAUSE DEDUCTION U/S.80IB(1 0) COULD NOT BE GRANTED TO ASSESSEE ON INCOMPLETE CONSTRUCTION AT RELEVA NT POINT OF TIME. REGARDING PROPORTIONATE DEDUCTION IN RESPECT OF 173 OF 205 FIATS OF PROJECT COMPLETED AS RECOGNIZED BY HEAL AUTHORITY , I.E., PMC IN ITS COMPLETION CERTIFICATE NO.BCO/03/01333 DATED 31.03. 2008, THE ID. AUTHORISED REPRESENTATIVE HEAVILY RELIED ON DECISION O F BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (SUPRA), BRIGADE ENTE RPRISES P. LTD. (SUPRA), AIR DEVELOPER (SUPRA), SHETH DEVELOPERS (SUPRA ) AND ALSO G.V. CORPORATION (SUPRA), WHEREIN DEDUCTION U/S.80LB( 10) WAS DENIED AS SIZE OF SOME OF THE RESIDENTIAL UNITS EXCEEDED PRESCRI BED LIMIT AS LAID DOWN U/S.80IB(10) OF THE ACT. ABOVE MENTIONED DECISIONS ARE APPLICABLE IN THEIR OWN SPHERE. I.E. ON POINT OF EXC ESS AREA OF SOME OF 4 THE FIATS WHICH HOLD GOOD IN ITS OWN SPHERE. HOWEVER, IN CASE BEFORE US, DEDUCTION 80IB(10) OF THE ACT HAS BEEN REJECTED ON THE GROUND THAT CONDITION OF COMPLETION OF PROJECT BEFORE THE DUE DATE I.E., 31.03.2008 AS LAID DOWN U/S.80IB(10)(C) OF THE ACT H AS NOT BEEN COMPLIED BY ASSESSEE WHICH IS BASIC CONDITION FOR ALLOWAB ILITY OF DEDUCTION U/S.80IB(10) OF THE ANT WE FIND THAT HI CA SE OF JOHAR HASSAN ZOJWALLA (SUPRA), WHEREIN CONDITION OF COMPLETION AS LAID DOWN IN SECTION 80IB(10)(A) COULD NOT BE COMPLIED WITH BECAU SE OF A STAY BEING GRANTED BY MRTP COURT. THUS FAULT OF INCOMPLE TION OF CONSTRUCTION WAS NOT ATTRIBUTABLE TO ASSESSEE. IN CASE SU CH A CONTINGENCY EMERGES WHICH MATES THE COMPLIANCE WITH P ROVISION IMPOSSIBLE, THEN BENEFIT BESTOWED ON AN ASSESSEE CANNOT BE COMPLETELY DENIED. SUCH LIBERAL INTERPRETATION SHOUL D BE USED IN FAVOUR OF ASSESSEE WHEN HE IS INCAPACITATED INCOMPLETIN G PROJECT IN TIME FOR THE REASONS BEYOND HIS CONTROL. IN CASE BEFOR E US, AS STATED ON BEHALF OF ASSESSEE, THAT ASSESSEE SUBMITTED CERTAIN MODIFICA TIONS/ RECTIFICATIONS FOR TOP FLOORS OF BUILDING. THE SAID MO DIFICATION / RECTIFICATION COULD NOT BE COMPLETED AS LOCAL AUTHOR ITY COULD NOT APPROVE THE MODIFICATION AS THEIR FILES HAVE BEEN TAK EN OVER BY CONCERN INTELLIGENCE DEPARTMENT FOR INVESTIGATION OF VIOLATION OF URBAN LAND CEILING AD APPLICABLE TO LAND IN QUESTION AT RE LEVANT POINT OF TIME. THIS FAD HAS NOT BEEN DISPUTED ON BEHALF OF REVENUE. T HUS, ASSESSEE WAS PREVENTED BY SUFFICIENT REASONABLE CAUSE WHICH COM PELLED THE IMPOSSIBILITY ON PART OF THE ASSESSEE TO HAVE COMPLETION CERTIFICATE IN TIME IT IS SETTLED LEGAL POSITION THAT THE LAW ALWAYS G IVE REMEDY AND THE LAW DOES WRONG TO NO ONE. WE AGREE TO PROPOSITION PUT FORWARD BY LD. DEPARTMENTAL REPRESENTATIVE THAT PLAIN READING O F SECTION 80IB(10) OF THE ACT SUGGESTS ABOUT ONLY COMPLETION OF CONSTRUCTION AND NO ADJECTIVE SHOULD BE USED ALONG WITH THE WORD C OMPLETION. THIS STRICT INTERPRETATION SHOULD BE GIVEN IN NORMAL CIRCU MSTANCES. HOWEVER, IN CASE BEFORE US, ASSESSEE WAS PREVENTED BY REA SONABLE CAUSE TO COMPLETE CONSTRUCTION IN TIME DUE TO INTERVE NTION OF CID ACTION ON ACCOUNT OF VIOLATION OF PROVISIONS OF URBA N LAND CEILING AD APPLICABLE TO LAND IN QUESTION. ASSESSES WAS INCAPACITATE D TO COMPLETE THE SAME IN TIME DUE TO REASONS BEYOND HIS CONTROL ASSESSEE SHOULD NOT SUFFER FOR SAME. THE REVISION OF PLAN IS VESTED RI GHT OF ASSESSEE WHICH CANNOT BE TAKEN AWAY BY STRICT PROVISIONS OF STAT UTE. THE TAXING STATUTE GRANTING INCENTIVES FOR PROMOTION OF GROWTH A ND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY AND THAT PROVISION FOR P ROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY. AT THE SAME TIME, RESTRICTION THEREON TOO HAS TO BE CONSTRUED STRICTLY SO AS TO ADVANCE THE OBJECT OF PROVISION AND NOT TO FRUSTRATE THE SAME. THE PROVISIONS OF TAXING STATUTE SHOULD BE CONSTRUED HARMONIOUSLY WITH TH E OBJECT OF STATUTE TO EFFECTUATE THE LEGISLATIVE INTENTION. IN V IEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT ASSESSEE IS ENTITLED FOR B ENEFIT U/S 80IB(10) OF THE ACT IN RESPECT OF 173 FLATS COMPLETED BEFORE PRESCRIBED LIMIT. THE ASSESSING OFFICER IS DIRECTED ACCO RDINGLY. 3.4 IN VIEW OF THE ABOVE FACTS AND THE APPELLATE ORD ER PASSED VIDE NO. PN/CIT(A)-II/ITO WD-2(3)/118/2011-12 DATED 03.0 9.2012 IN APPELLANT'S CASE FOLLOWING THE DECISION OF PUNE ITAT I N THIS REGARD, THE A.O. IS DIRECTED TO ALLOW CLAIM OF DEDUCTION U/S 80IB (10) AMOUNTING TO RS. 2,52,67,198/- FOR THE YEAR UNDER CONSIDERATION. G ROUNDS OF APPEAL NO. 1 TO 6 RAISED BY THE APPELLANT ARE, THEREFORE, L IABLE TO BE ALLOWED. 5 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN ALLOWING ASSESSEE'S CLAIM OF DEDUCTION U/S.80IB(10) OF RS.2,52,67,198/- WHEN THE ASSESSEE HAD COMPLETED ONLY 85 % OF THE PROJECT, THUS VIOLATING THE PROVISIONS OF SECTION 80IB (10)(A)(II) OF THE ACT. 2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN HOLDING THAT THE APPROVAL OR COMPLETION OF A HOUSING PROJECT WITHIN THE MEANING OF EXPLANATION (I) AND (II) APPEARING U NDER CLAUSE (A) OF SECTION 80IB(10) WILL HAVE TO BE TREATED AS APPROVAL OR COMPLETION OF THE BUILDING PLAN NOTWITHSTANDING THAT THE BUILDING MAY BE ONLY A PART OF THE LARGE HOUSING PROJECT, IN SO FAR AS SUCH BUILDI NG SATISFIES THE CONDITIONS LAID DOWN IN SECTION 80IB(10) ? 3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN NOT APPRECIATING THE FACT THAT THE REVISED SANCTION P LAN WAS RECEIVED BY THE ASSESSEE ON 31.03.2008 WHEN 173 FLATS OUT OF 205 FLATS OF THE PROJECT WAS ALREADY COMPLETED AND AS SUCH THE ASSESSEE COU LD HAVE COMPLETED 32 FLATS OF THE PROJECT BEFORE THE STIPULAT ED DATE I.E. 31.03.2009, WHICH THE ASSESSEE FAILED TO DO? 4) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN CONSIDERING THE PLEA OF THE ASSESSEE THAT THE LOCAL AUTH ORITY COULD NOT APPROVE THE MODIFICATION AS THEIR FILES HAD BEEN TAKE N OVER BY INTELLIGENCE DEPARTMENT FOR INVESTIGATION OF VIOLATI ON OF URBAN LAND CEILING ACT APPEARS AS OUT OF 4 PMC FILES WHICH WERE SE IZED ON 27.11.2005, 2 WERE RETURNED ON 12.07.2006 ITSELF AND THE REMAINING 2 FILES WERE RETURNED ON 16.11.2007 AND 19.07.2008. 5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE 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. IT IS AN UND ISPUTED FACT THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE FOR A.YRS. 2007-08, 2008-09 AND 2009-10 UN DER IDENTICAL CIRCUMSTANCES. MERELY BECAUSE THE REVENUE HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL AND HAS FILED APPEALS BEFO RE THE HONBLE HIGH COURT, THE SAME IN OUR OPINION CANNOT BE A GROUND T O TAKE A CONTRARY DECISION THAN THE DECISION OF THE TRIBUNAL IN ASSES SEES OWN CASE 6 ESPECIALLY WHEN BOTH OF US ARE PARTIES TO THE SAID ORDERS. SINCE THE LD.CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMED IATELY THREE PRECEDING ASSESSMENT YEARS, THEREFORE, IN ABSENCE O F ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE DECISION OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). WE A CCORDINGLY UPHOLD THE SAME. THE GROUNDS RAISED BY THE REVENUE ARE ACCORD INGLY 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)-II, PUNE 4. THE CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE