DCIT, Bangalore V. M/s Renaissance Holding & Developers Pvt. Ltd., Bangalore

ITA 1538/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51323 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE JT
• Assessee Lawyers: H N KHINCHA
• Section: 80IB

Judgement Text

ITA.1538/B/2010 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI. GEORGE GEORGE K. JUDICIAL MEMBER I.T.A NO.1538/BANG/2010 (ASSESSMENT YEAR : 2007-08) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -12(1), BANGALORE .. APPELLANT V. M/S. RENNAISSANCE HOLDINGS & DEVELOPERS P. LTD., NO.12, 18TH CROSS, 6TH MAIN, MALLESWARAM, BANGALORE 560 055 .. RESPONDENT PAN ; AAACR6804J APPELLANT BY : SHRI. SUSAN THOMAS JOSE, JT. CIT RESPONDENT BY : SHRI. H. N. KHINCHA, CA DATE OF HEARING : 20.10.2011 DATE OF PRONOUNCEMENT : 20.10.2011 O R D E R PER N. BARATHVAJA SANKAR, VICE PRESIDENT : THIS IS AN APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE OF M/S. RENNAISSANCE HOLDI NGS & DEVELOPERS P. LTD., BANGALORE, AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME- TAX(A)-III, BANGALORE, DATED.22.09.2010. ITA.1538/B/2010 PAGE - 2 02. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSEE I S A BUILDER ENGAGED IN THE BUSINESS OF CONSTRUCTING APARTMENT COMPLEXES AT DIFFERENT LOCATIONS IN BANGALORE. IN RESPECT OF ALL THE PROJ ECTS IN PROGRESS, THE ASSESSEE DECLARED THE REVENUE ON PERCENTAGE COMPLET ION METHOD AND BEGINS TO ACCOUNT WHEN THE PROJECT PROGRESSES MORE THAN 20% I.E., AS AND WHEN THE COST INCURRED EXCEEDS MORE THAN 20% OF THE EXPECTED COST. THE RETURNED INCOME IS COMPUTED AFTER CLAIMI NG DEDUCTION OF RS.6,54,25,610/- U/S.80IB(10) BEING PROFITS MADE ON 3 PROJECTS NAMELY PARK-II, PARK-III AND AERO. THE LOSSES INCURRED ON SIMILAR 80IB PROJECTS NAMELY BRINDAVAN AND EXOTICA ARE DISALLOWE D AND ADDED BACK IN THE COMPUTATION OF INCOME. IN RESPECT OF 80IB C LAIM, ASSESSEE SUBMITTED STATUTORY REPORTS OF THE AUDITOR IN FORM NO.10CCB CERTIFYING THE PROFITS OF THE UNITS ELIGIBLE FOR 80 IB DEDUCTION. FURTHER DETAILS IN RESPECT OF THESE PROJECTS HAVE BEEN FILE D. WITH A VIEW TO ASCERTAIN WHETHER THE SAID PROJECTS HAVE COMPLIED W ITH 80IB CONDITIONS, A REFERENCE WAS MADE TO THE DVO ON 05.1 1.2009 TO REPORT ON THE BUILT UP AREA OF THE FLATS AND OTHER CRITERI A FOR THIS DEDUCTION. IN THE DVO'S REPORT DATED.29.12.2009 IT WAS REPORTED T HAT ONE OR TWO FLATS WERE SELECTED AT RANDOM WHOSE SUPER BUILT UP AREA WAS HIGHEST AMONG THE FLATS OF THE RESPECTIVE PROJECTS AND MEAS UREMENTS WERE MADE. AFTER SUCH MEASUREMENTS, HE REPORTED THAT IN ONE OF THE PROJECTS NAMELY PARK-II, A FLAT BEARING NO.705 HAS MEASURED 1601 SQ.FT ITA.1538/B/2010 PAGE - 3 OF BUILT UP AREA AS DEFINED IN SECTION 80IB. SO, T HIS AMOUNTS TO VIOLATION OF ONE OF THE CONDITIONS NAMELY, BUILT UP AREA OF ONE OF THE RESIDENTIAL UNITS SHOULD EXCEED MORE THAN 1500 SQ.F T. AFTER RECEIPT OF THIS REPORT THE ASSESSEE WAS ASKED TO SHOW REASON A S TO WHY DEDUCTION U/S.80IB IN RESPECT OF PARK-II PROJECT SHOULD NOT B E DENIED. IT WAS SUBMITTED BY THE ASSESSEE THAT THERE WAS A DISCREPA NCY IN THE MEASUREMENTS OF THE DVO AND HENCE THERE WAS NO VIOL ATION WITH REGARD TO THE BUILT UP AREA. FURTHER, IT WAS SUBMI TTED THAT THE PROFIT ON THIS FLAT WAS NOT INCLUDED IN THE PROFITS OFFERED I N THIS YEAR AS THE SAID FLAT MEASURED BY DVO WAS NOT SOLD. THE ASSESSING O FFICER DID NOT ACCEPT THE ASSESSEE'S SUBMISSIONS ON THE GROUND THA T THE DVO WAS A STATUTORY AUTHORITY AND HIS REPORT COULD NOT BE DIS PUTED. THE ASSESSING OFFICER FURTHER HELD THAT THE DEDUCTION I S LINKED UP ONLY WITH THE SATISFACTION OF CONDITION OF BUILT UP AREA OF THE RESIDENTIAL UNITS IN THE PROJECT, WHATEVER MAY BE THE STATUS OF THE UNITS IN THE PROJECT. CONSIDERING THAT THERE WAS A VIOLATION OF THE CONDITION LAID DOWN IN SECTION 80IB, THE ASSESSING OFFICER DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE OF RS.2,04,65,215/-. BEING AGGRIEVED THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(A). ITA.1538/B/2010 PAGE - 4 03. THE COMMISSIONER OF INCOME-TAX(A) SENT THE MATT ER BACK TO THE ASSESSING OFFICER TO ALLOW THE DEDUCTION ON PRORATA BASIS, BY OBSERVING IN PARA 7.0 OF HIS ORDER AS UNDER : '7.0 AFTER CONSIDERING THE ABOVE ARGUMENTS OF THE APPELLANT, THE JURISDICTIONAL ITAT'S DECISION IN TH E CASE OF DCIT V. M/S. BRIGADE ENTERPRISES PRIVATE LIMITED (2008) 119 TTJ 0269 (BANGALORE, SJR BUILDERS IN ITA NO.1192/BANG/2 008 DATED 21-08-2009 AND M/S. MYSTIC INVESTMENT IN ITA 1170- BANG-2007 DATED 25TH APRIL 2007, FOLLOWING THE BIND ING PRECEDENT OF HON'BLE ITAT BANGALORE BENCH, I HOLD T HAT THE RESTRICTION FOR DEDUCTION U/S.80IB OF INCOME-TAX AC T, 1961 IS TO BE MADE ONLY WITH REFERENCE TO AREA OF THE FLAT(S) WHOSE BUILT UP AREA IS MORE THAN THE PRESCRIBED LIMIT OF 1500 SQ.F T. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO PROP ORTIONATELY CALCULATE THE DISALLOWANCE TO BE MADE U/S.80IB FOR IN PROPORTION TO THE AREA OF THAT FLAT (S) AND RESTRIC T THE DISALLOWANCE U/S.80IB OF INCOME-TAX ACT, 1961 ONLY TO THE SAME. FOR THE BALANCE AREA, THE APPELLANT WOULD BE ENTITLED TO THE DEDUCTION U/S.80IB OF INCOME-TAX ACT, 1961.' HENCE, THE REVENUE IS IN APPEAL BEFORE US. 05. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE MATERIAL ON RECORD. WE FIND THAT THIS ISSUE IS COV ERED BY THE EARLIER ORDERS OF THE TRIBUNAL IN DCIT V. M/S. BRIGADE ENTE RPRISES PRIVATE LIMITED (2008) 119 TTJ 0269 (BANGALORE, SJR BUILDER S IN ITA ITA.1538/B/2010 PAGE - 5 NO.1192/BANG/2008 DATED 21-08-2009 AND M/S. MYSTIC INVESTMENT IN ITA 1170-BANG-2007 DATED 25TH APRIL 2007 , WHEREIN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL AND ARE IN SUPPORT OF T HE DECISION OF THE COMMISSIONER OF INCOME-TAX(A). MOREOVER, WE FIND T HAT ALTHOUGH THE REVENUE HAS STATED IN ITS GROUNDS THAT THE DEPA RTMENT IS ON APPEAL U/S.260A AGAINST THE TRIBUNAL ORDER, NOTHING HAS BE EN BROUGHT ON RECORD TO SHOW THAT THE TRIBUNAL'S ORDER HAS BEEN R EVERSED OR QUASHED BY THE HON'BLE HIGH COURT. IN SUCH CIRCUMSTANCES, THE ABOVE CITED ORDERS OF THE TRIBUNAL HOLD THE FIELD. HENCE FOLLO WING THE EARLIER ORDERS OF THIS BENCH, WE DISMISS THE REVENUE'S APPE AL. 06. IN THE RESULT, REVENUE'S APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20TH DAY OF OCTOB ER, 2011, AT BANGALORE. SD/- SD/- (GEORGE GEORGE K) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT