ITO, Pune V. M/s Khandge Mehta Associates, Pune

ITA 1590/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84873 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 21-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Assessee Lawyers: N W KHARE
• Keywords: Value adopted by valuation officer
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS.1590 & 1591/PN/2013 (A.YS: 2005-06 & 2007-08) ITO, WARD 8 (2), PUNE APPELLANT VS. M/S. KHANDGE MEHTA ASSOCIATES SHOP NO.7, PURUSHOTTAM NIVAS, MALI ALI, TALEGAON-DABHADE, PUNE 410506 PAN: AAHFK1312J RESPONDENT APPELLANT BY : SHRI P.S. NA IK RESPONDENT BY : SHRI N.W. KHARE DATE OF HEARING: 20.08.2014 DATE OF ORDER : 25.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE FILE D BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF COMMISSION ER OF INCOME TAX (APPEAL)-V, PUNE, DATED 31.05.2013 FOR A.YS. 20 05-06 AND 2007-08. 2. IN ITA NO.1590/PN/2013 FOR A.Y. 2005-06, THE REV ENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THA T THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S. 80IB(10) OF THE IT. ACT, 1961 ON PRO-RATA BASIS IN RESPECT OF ELIGIBLE UNITS, WHEN THERE IS NO SUCH PROVISION IN THE ACT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80I B(10) EVEN WHEN THE PROJECT 'STANTAI NAGRI AT TALEGAON', WAS NOT ON A SIZE OF LAND OF MINIMUM 1 ACRE AS REQUIRED UND ER SECTION 80IB(10) OF THE IT ACT, 1961 AND THAT IT DI D NOT GET 2 ITA NOS.1590 & 1591/PN/13 M/S. KHANDGE MEHTA ASSOCIATES SANCTIONED BY THE LOCAL AUTHORITY AS A WHOLE, BUT I N PIECEMEAL MANNER WITH EACH SANCTIONED PORTION HAVIN G PLOT AREA OF LESS THAN 1 ACRE ? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80I B(10) WHEN THE A.O. HAD RIGHTLY INVOKED PROVISIONS OF SEC.80IB(10)(D) AS THE PROJECT CONSISTED OF SHOPS T OTALING TO 209.52 SQ.MTR, WHICH WAS MORE THAN 5% OF THE AGGREG ATE BUILT UP AREA OF THE PROJECT OR 2000 SQ.FT, WHICHEV ER IS LESS ? 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY OF THE ABOVE GROUNDS OF APPEAL. 2. THE ASSESSEE IS BUILDER, PROMOTER AND DEVELOPER . IN THIS CASE, RETURN OF INCOME DECLARING RS.NIL WAS FILED O N 31.10.2005 IN WHICH DEDUCTION U/S.80IB(10) OF THE ACT WAS CLAI MED AT RS.2,89,395/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND ORDER U/S.143(3) WAS PASSED ON 28.12.2007, WHER EIN THE DEDUCTION OF RS.2,89,395/- WAS ALLOWED. SUBSEQUENT LY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2006- 07, THE ISSUE OF DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF THE PROJECT SHANTAI NAGRI AT TALEGAON, PUNE WAS REFERRED BY T HE ASSESSING OFFICER TO THE DVO AND THE DVO REPORTED THAT THE AS SESSEE DID NOT FULFILL FOLLOWING CONDITIONS OF SECTION 80IB(10 ) OF THE ACT ON ACCOUNT OF FOLLOWING FACTS: I) HAVING BUILT UP AREA OF RESIDENTIAL UNIT BELOW 1500 SQ.FT. II) HAVING COMMERCIAL BUILT UP AREA BELOW 2000 SQ. FT. III) PROJECT IS NOT ON A SIZE OF LAND OF MINIMUM A REA OF ONE ACRE AS THE PROJECT IS NOT GOT SANCTIONED BY THE LO CAL AUTHORITY AS A WHOLE, BUT GOT SANCTIONED IN A PIECE MEAL MANNER, EACH SANCTIONED PORTION HAVING THE PLOT ARE OF LESS THAN ONE ACRE.' 2.1 SINCE THE CLAIM OF DEDUCTION U/S. 80IB(10) OF T HE ACT WAS DISALLOWED IN A.Y. 2006-07, THE ASSESSMENT FOR A.Y. 2005-06 WAS REOPENED U/S. 147 OF THE ACT AND NOTICE U/S. 148 WA S ISSUED ON 3 ITA NOS.1590 & 1591/PN/13 M/S. KHANDGE MEHTA ASSOCIATES 31.03.2010. SUBSEQUENTLY, THE ASSESSMENT WAS COMPL ETED U/S. 143(3) R.W.S. 147 OF THE ACT ON 30.12.2010 IN WHICH DEDUCTION U/S.80IB(10) AMOUNTING TO RS.2,89,395/- WAS DISALLO WED, FOLLOWING THE ORDER OF A.Y. 2006-07. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE MATTER WAS CARRIED BEFORE TH E FIRST APPELLATE AUTHORITY WHEREIN THE VARIOUS CONTENTIONS HAVE BEEN RAISED ON BEHALF OF THE ASSESSEE AND HAVING CONSIDE RED THE SAME, THE CIT(A) HAS GRANTED RELIEF ON MERIT TO THE ASSES SEE FOLLOWING THE DECISION OF ITAT, PUNE IN ITA NO.558/PN/2011 FO R A.Y. 2006- 07. THE RELEVANT PORTION OF THE ORDER OF ITAT IS R EPRODUCED AS UNDER: '5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE RECORD. THE LD. COUNSEL SUBMITS THAT IF THE PROJECT IS APPROVED ON PIECE-MEAL BASIS, THAT CANNO T BE REASON FOR NOT CONSIDERING THE AREA OF ENTIRE PLOT WHICH IS TAKEN FOR DEVELOPMENT, WHICH IS ADMITTEDLY MORE THA N ONCE ACRE. HE SUBMITS THAT SO FAR AS THE COMMERCIAL AREA IN THE PROJECT IS CONCERNED, THE DVO HAS REPORTED THAT THE BUILT UP COMMERCIAL AREA IS 2225 SQ.FT. IN FACT, THERE IS A WRONG CALCULATION AREA OF THE SHOP NO. 24B WHICH IS NOT 8 30.65 SQ.FT. BUT 28.80 SQ.MTRS AND IT IS CLEAR FROM THE C ONVEYANCE DEED REGISTERED IN THE NAME OF MRS. RUPALI BHEGDE. HE SUBMITS THAT ONE RESIDENTIAL UNIT ADJOINING TO THE SHOP IS SOLD TO ONE SHRI NAVANATH BHEGDE, THAT IS ALSO CONS IDERED AS A PART OF THE COMMERCIAL UNIT. SO FAR AS THE CHA RGE OF EXCESS BUILT UP AREA OF THE 2 UNITS/FLAT IS CONCERN ED, HE SUBMITS THAT AS PER THE SANCTION PLAN, THERE ARE TW O UNITS AND AFTER PURCHASING THE UNITS/FLATS, THE PURCHASER S HAVE MERGED THE PREMISES AS ONE AND ASSESSEE CANNOT HAVE THE CONTROL OVER THE SAME. ALTERNATIVELY, HE PLEADED TH AT IF THERE IS A VIOLATION OF 2 UNITS IN RESPECT OF THE BUILT-U P AREA, THEN TO THAT EXTENT THE PRO-RATA DEDUCTION MAY NOT BE AL LOWED. WE HAVE ALSO HEARD THE LD. D.R. 6. SO FAR AS THE TOTAL AREA OF THE PLOT IS CONCERNE D, WE FIND THAT THE LD CIT(A) IS TOTALLY SILENT ON THE SAME AN D IT IS MORE THAN 1 ACRE. MERELY BECAUSE THE PROJECT IS SANCTIO NED IN STAGES, THAT CANNOT BE DECISIVE TO CALCULATE THE TO TAL AREA UNDER THE PROJECT. THERE WILL BE DIFFERENT REASON FOR THE DEVELOPER TO GO WITH PIECEMEAL DEVELOPMENT, BUT THE 'FACTUAL ASPECT WE HAVE TO SEE WHETHER THE AREA IS MORE THAN 1 ACRE. SO FAR AS THE CHARGE OF VIOLATION OF THE BUILT UP A REA OF THE FLAT/UNIT IS CONCERNED, IN OUR OPINION 1 , AT THE MOST, TO THAT 4 ITA NOS.1590 & 1591/PN/13 M/S. KHANDGE MEHTA ASSOCIATES EXTENT DEDUCTION U/S. 80IB(10) SHOULD NOT BE ALLOWE D ON THE PROFITS ATTRIBUTABLE TO THOSE TWO FLATS, BUT THE AS SESSEE, CANNOT BE DENIED ENTIRE BENEFIT U/S.80IB(10). ON THIS ISSUE, WE MAY REFER HERE DECISIONS OF THE CO-ORDINA TE BENCHES AS UNDER: 1. EMGREEN HOLDINGS (P.) LTD. V. DCIT, ITA NOS.3594, 3595, 3647 & 3648/MUM/2009, ORDER DATED 29.7.2011. 2. SJR BUILDERS V. ACIT, 3 ITR (TRIB) 569(BANG.) 3. SREEVATSA REAL ESTATES (P.) LTD. V. ITO, ITA NO. 25 05 AND 2506/MAD/2006, ORDER DATED 23.4.2010 4. G. V. CORPORATION V. ITO (MUM), 38 SOT 174(MUM.) IN ALL THE ABOVE DECISIONS, THE CO-ORDINATE BENCHES HAVE TAKEN VIEW THAT TO THE EXTENT OF VIOLATION OF THE B UILT UP AREA, THE ASSESSEE SHOULD NOT BE DENIED THE ENTIRE BENEFIT OF SEC.80IB(10), BUT PRO-RATA DEDUCTION SHOULD BE ALLO WED. WE, ACCORDINGLY, DIRECT THE A.O TO ALLOW THE PRO RATA D EDUCTION TO THE ASSESSEE IN THE LIGHT OF OUR ABOVE DECISIONS . 7. IN THE RESULT, ASSESSEE'S APPEAL IS PARTLY ALLOW ED.' 3. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLED GE ON BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOL LOWING THE SAME REASONING, WE ARE NOT INCLINED TO INTERFERE WITH TH E FINDING OF CIT(A) WHO HAS GRANTED RELIEF BY FOLLOWING THE DECI SION OF COORDINATE BENCH BY OBSERVING THAT TO THE EXTENT OF VIOLATION OF BUILT UP AREA, THE ASSESSEE SHOULD NOT BE DENIED TH E ENTIRE BENEFIT OF SECTION 80IB(10) OF THE ACT, BUT PRORATA DEDUCTION SHOULD BE ALLOWED AND THE ASSESSING OFFICER WAS RIG HTLY DIRECTED ACCORDINGLY. WE UPHOLD THE SAME. 4. A SIMILAR ISSUE AROSE IN ITA NO.1591/PN/2013 FOR A.Y. 2007-08. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING O F CIT(A) WHO HAS GRANTED RELIEF BY FOLLOWING THE DECISION OF COORDIN ATE BENCH BY OBSERVING THAT TO THE EXTENT OF VIOLATION OF BUILT UP AREA, THE ASSESSEE SHOULD NOT BE DENIED THE ENTIRE BENEFIT OF SECTION 5 ITA NOS.1590 & 1591/PN/13 M/S. KHANDGE MEHTA ASSOCIATES 80IB(10) OF THE ACT, BUT PRORATA DEDUCTION SHOULD B E ALLOWED AND THE ASSESSING OFFICER WAS RIGHTLY DIRECTED ACCORDIN GLY. WE UPHOLD THE SAME. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 25 TH DAY OF AUGUST, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 25 TH AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-V, PUNE 4) THE CIT-V, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE