NEELKANTH PALM REALTY, MUMBAI V. ADDL CIT RG 15(3), MUMBAI

ITA 1591/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84295 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: VIJAY MEHTA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & VIVEK VARMA , J M ITA NO. 1591 / MUM/20 1 1 ( ASSESSMENT YEAR : 200 7 - 0 8 ) M/S NEELKANTH PALM REALTY, FINE HOUSE, ANANDJI LANE, 5 TH FLOOR, M.G. ROAD, GHATKOPAR (E), MUMBAI - 400 077 VS. ADCIT, RANGE - 15(3), MUMBAI PAN/GIR NO. : A A EEN 5224 B ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI VIJAY MEHTA /REVENUE BY : SHRI PAVAN KUMAR BEERLA DATE OF HEARING : 1 7 TH NOVEMBER , 201 4 DATE OF PRON OUNCEMENT 17 TH NOVEMBER , 201 4 O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER CIT(A) DATED 28 - 1 - 2011 , IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF THE I.T. ACT, FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 2 . THE GROUND RAISED BY THE ASSESSEE IS IN REGARD TO ACTION OF THE CIT(A) IN UPHOLDING THE DISALLOWANCE OF DEDUCTION U/S.80IB(10) OF RS. 7,13,40,890/ - . 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING RESIDENTIAL PROJECTS IN THANE. DURING THE YEAR, THE RESIDENTIAL PROJECT NAMELY NEELKANTH PALM AT MAJIWADE, THANE WAS DEVELOPED AND ITA NO. 1591 / 1 1 2 COMPLETED IN ADDITION TO CLASSIQUE HOUSING PROJECT AND ROYALE HOUSING PROJECTED COMPLETED EA RLIER. DURING THE YEAR, THE ASSESSEE CLAIMED DEDUCTION U/S.80IB(10) OUT OF THE PROFITS ON PROPORTIONATE BASIS ON THE PROJECT NAMELY ROYAL HOUSING PROJECT. IN VIEW OF THE ABOVE, THE ASSESSEE WAS ASKED BY THE AO AS TO HOW THE PROPORTIONATE DEDUCTION U/S.80IB (10) ON THE UNITS HAVING BUILT UP AREA BELOW 1000 SQF.FT. IS ALLOWABLE WHEN NO SUCH PROVISIONS ARE THERE IN THE IT ACT. THE ASSESSEE SUBMITTED A DETAILED REPLY AND RELIED ON VARIOUS DECISION OF THE TRIBUNAL AND THE COURTS. THE AO DID NOT CONVINCE WITH THE EXPLANATION OF THE ASSESSEE AND DISALLOWED THE ENTIRE CLAIM OF DEDUCTION U/S.80IB(10) CLAIMED PROPORTIONATELY AT RS. 6,52,49,467/ - . 4 . BY THE IMPUGNED ORDER THE CIT(A) AFTER RELYING VARIOUS JUDICIAL PRONOUNCEMENT AS WELL AS THE DECISION OF THE SPECIAL BENC H OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES , CONFIRMED THE DISALLOWANCE MADE BY THE AO U/S.80IB OF THE ACT BY HOLDING THAT THE ASSESSEE HAS EVIDENTLY VIOLATED THE PROVISION OF SECTION 80IB(10(C) AND FAILED TO FULFILL ALL THE CONDITIONS OF LAW, THERE FORE, THE ASSESSEE IS NOT ENTITLED FOR ANY SUCH DEDUCTION ON PROPORTIONATE BASIS WHICH WAS CLAIMED AT RS. 6,52,47,267/ - AND REVISED LATER BEFORE THE AO. 5 . LEARNED AR, BEFORE US, SUBMITTED THAT THE CIT(A) THE PROPORTIONATE DEDUCTION CLAIMED U/S. 80IB(10) OF THE ACT WAS WRONGLY DISALLOWED BY THE AO , WHICH WAS NOT TAKEN INTO CONSIDERATION BY THE CIT(A). HE FURTHER SUBMITTED THAT THE DEDUCTION U/S.80IB(10) OF RS.6,52,47,267/ - (WHICH IS LATER IN THE ASSESSMENT PROCEEDINGS REVISED TO RS. 7,13,40,890/ - ) WAS CLAIMED IN THE RETURN OF INCOME BUT THE AO DID NOT CONSIDER THE ITA NO. 1591 / 1 1 3 SUBMISSION OF THE ASSESSEE AND DISALLOWED THE DEDUCTION AS CLAIMED U/S.80IB . HE FURTHER SUBMITTED THAT THE ONLY DISPUTE INVOLVED IN THIS CASE IS ABOUT MERGING OF SOME FLATS WHICH NOW HAVE THE BUILT U P AREA ABOVE 1000 SQ.FT. AND IN VIEW OF THIS FACT NO DEDUCTION WAS CLAIMED ON SUCH 152 FLATS OUT OF 286 FLATS BUT PROPORTIONATE DEDUCTION U/S.80IB(10) IS CLAIMED ONLY ON 144 UNITS HAVING BUILT UP AREA BELOW 1000 SQ.FT. WHICH IS ALLOWABLE AS PER LAW. IN SUP PORT OF HIS CONTENTIONS, LEARNED AR RELIED ON THE FOLLOWING DECISION S : - I) G.V. CORPORATION VS. ITO, 38 SOT 174(MUM); II) ACIT VS. SHETH DEVELOPERS (P) LTD., 33 SOT 277 (MUM); III) VISWAS PROMOTERS (P) LTD. VS. ACIT, 255 CTR 149; IV) SJR BUILDERS VS. ACIT, ITA NO. 1192/B/2008, DTD.21.8.2009 (BANG) V) SANGHVI & DOSHI ENTERPRISE VS. ITO, 131 ITD 151(CHENNAI); VI) ITO VS. AIR DEVELOPERS, 122 ITD 125 (NAG); VII) DCIT VS. BRIGADE ENTERPRISES P. LTD., 28 SOT 7 (BANG); VIII) DCIT VS. PARKWAY DEVELOPMENT, IT A NO.1419/BANG/2010, DTD.20 - 8 - 10; IX) ACIT VS. BENGAL AMBUJA HOUSING DEVELOPMENT LTD., ITA NO.458/2006, DATED. 5.1.2007 (CALCUTTA HIGH COURT) . 6 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF LOWER AUTHORITIES. 7 . WE HAVE CONSIDERED RIVAL CONTEN TIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DECLINE OF PROPORTIONATE CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF UNITS HAVING BUILT - UP AREA BELOW 1000 SQ.FT. THE ISSUE HAS BEEN DECIDED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF G.V. CORPO RATION VS. ITO, 38 SOT 174(MUM), WHEREIN IT WAS HELD THAT IN VIEW OF THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES, ITA NO. 1591 / 1 1 4 119 ITD 255, ASSESSEE IS ELIGIBLE FOR PROPORTIONATE DEDU CTION IN RESPECT OF PROFITS FROM ELIGIBLE HOUSING PROJECTS. 8 . HON BLE MADRAS HIGH COURT IN THE CASE OF VISWAS PROMOTERS (P) LTD., 255 CTR 149, HELD THAT WITHIN THE COMPOSITE HOUSING PROJECT, WHERE THERE ARE ELIGIBLE AND INELIGIBLE UNITS, THE ASSESSEE CAN CLAIM DEDUCTION IN RESPECT OF ELIGIBLE UNITS IN THE PROJECT. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT AND COORDINATE BENCH OF THE TRIBUNAL, WE DIRECT THE AO TO ALLOW ASSESSEES CLAIM OF DEDUCTION WITH RESPECT TO HOUSES HAVING AREA BELOW 1000 SQ.FT. SUBJECT TO FULFILLING OTHER CONDITIONS OF SECTION 80IB(10) . 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 7 /11/ 201 4 . 1 7 /11/ 2014 SD/ - SD/ - ( ) ( VIVEK VARMA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT M EMBER MUMBAI ; DATED 1 7 / 11 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//