ITO 33(1)(3), MUMBAI V. E.B.R. ENTERPRISES, MUMBAI

ITA 1618/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0814 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 19-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGA RWAL, AM ITA NO. 1618/MUM/2015 ASSESSMENT YEAR : 2010-11 THE ITO 33(1)(3) MUMBAI M/S. E B R ENTERPRISES 1 ST FLOOR, ROCK AVENUE, OPP JOY ICE-CREAM, HINDUSTAN NAKA, KANDIVALI (W), MUMBAI- 400 067 PAN AAAAE2057J (APPELLANT) (RESPONDENT) APPELLANT BY : DR A K NAYAK RESPONDENT BY : SHRI PRATEEK JAIN DATE OF HEARING : 2 7 .0 4 .2017 DATE OF PRONOUNCEMENT : 09 .0 5 .2017 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST ORDER DATED 14.11.2014, OF LEARNED CIT(A)-26 MUMBAI, FOR THE AS SESSMENT YEAR 2010-11. 2. THE ONLY ISSUE RAISED BY THE DEPARTMENT IN THE P RESENT APPEAL IS CHALLENGING THE DECISION OF THE CIT(A) IN ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S. 80IB(10). 3. BRIEFLY, FACTS ARE ASSESSEE A PARTNERSHIP FIRM , IS A BUILDER, DEVELOPER AND DEALER IN REAL ESTATE. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME ON 15.10.2010, DECLARING TOTAL INCOME OF ITA NO.1618/MUM/2015 M/S. E B R ENTERPRISES 2 ` .1.27,78,328/-. SUBSEQUENTLY, THE ASSESSEE FILED R EVISED RETURN OF INCOME CLAIMING DEDUCTION OF AMOUNT OF ` .1,18,62,787/- U/S. 80 IB(10) FOR THE HOUSING PROJECT ROCK ENCLAVE SITUATED AT KANDIVAL I (W), MUMBAI. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO, WHILE EXAM INING THE DETAILS OF THE SAID HOUSING PROJECT, FOUND THAT THE HOUSING PROJEC T WAS APPROVED ON 12.10.2004 AND WAS COMPLETED ON 1.02.2008 ON TOTAL AREA OF 1,53,770 ACRES. HE FURTHER NOTICED THE HOUSING PROJECT CONSISTS OF TWO BUILDINGS OUT OF WHICH, BUILDING NO.1 HAS SIX WINGS AND BUILDING NO.2 HAS F OUR WINGS. HE FURTHER NOTICED THAT BUILDING NO.1 HAS 258 RESIDENTIAL UNIT S AND 45 COMMERCIAL SHOPS WHEREAS, BUILDING NO.2 HAS 128 RESIDENTIAL UNITS AN D 20 COMMERCIAL SHOPS. HE FURTHER NOTICED THAT THE TOTAL BUILT-UP AREA OF THE RESIDENTIAL UNITS IS 2,72,102.53 SQ. FT., AND THAT OF COMMERCIAL UNIT IS APPROXIMATELY 20,710 SQ. FT. THUS, THE BUILT-UP AREA OF COMMERCIAL UNIT WOR KS OUT TO APPROXIMATELY 7.07% OF THE TOTAL BUILT UP AREA. THE AO FOUND THA T AS PER AMENDMENT BROUGHT INTO SECTION 80IB(10) BY FINANCE ACT, 2004 BY THE INTRODUCTION OF SUB-CLAUSE (D) W.E.F. 01.04.2005, THE COMMERCIAL AR EA OF A HOUSING PROJECT IF EXCEEDS 5% OF THE TOTAL BUILT-UP AREA OR 2000 SQ. F T., WHICHEVER IS LESS, THE HOUSING PROJECT WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S. 80IB(10). HE THEREFORE, CALLED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM. THOUGH THE ASSESSEE RELYING UPON CERTAIN JUDICIAL PRECEDENTS SUBMITTED THAT THE AMENDED PROVISIONS OF SUB CLAUSE (D) TO SECTION 80IB(10) WO ULD NOT BE APPLICABLE TO A ITA NO.1618/MUM/2015 M/S. E B R ENTERPRISES 3 HOUSING PROJECT APPROVED BEFORE 01.04.2005, HOWEVER , THE AO DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND HELD T HAT SAID AMENDED PROVISIONS WOULD BE APPLICABLE FROM ASSESSMENT YEAR 2005-06. THUS, ULTIMATELY, RELYING UPON THE SAID AMENDED PROVISION S THE AO HELD THAT THE ASSESSEE IS INELIGIBLE TO CLAIM DEDUCTION U/S. 80IB (10) AND, ACCORDINGLY, DISALLOWED THE DEDUCTION CLAIMED OF ` .1,18,62,787/-. THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE CIT(A) BY FI LING APPEAL. 4. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE AND RELYING UPON THE JUDICIAL PRECEDENTS CITED BEFO RE HIM HELD THAT THE AMENDED PROVISIONS OF SUB CLAUSE (D) OF SECTION 80I B(10) HAVING BEEN BROUGHT INTO STATUTE W.E.F. 01.04.2005, WOULD NOT B E APPLICABLE TO A PROJECT APPROVED PRIOR TO 01.04.2005. ACCORDINGLY, HE ALLOW ED THE ASSESSEES CLAIM OF DEDUCTION. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD. THE LEARNED COUNSELS APPEARING FOR BOTH THE PARTIES HAV E AGREED BEFORE US THAT THE ISSUE IN DISPUTE STANDS SETTLED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SARKAR BUILDERS (2015) 375 ITR 392 (SC). ON A CAREFUL READING OF THE AFORESAID JU DGMENT OF THE HONBLE SUPREME COURT, IT IS NOTICED THAT THE HONBEL SUPRE ME COURT HAS HELD THAT THE AMENDMENT TO SECTION 80IB(10) BY FINANCE ACT, 2004 INTRODUCING CLAUSE (D) WOULD APPLY PROSPECTIVELY FROM 01.04.2005, AND WILL NOT APPLY TO HOUSING ITA NO.1618/MUM/2015 M/S. E B R ENTERPRISES 4 PROJECTS APPROVED PRIOR TO 01.04.2005. IN VIEW OF THE BINDING PRINCIPLE OF HONBLE SUPREME COURT AS REFERRED TO ABOVE, WE DO N OT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN ALLOWING ASSESSEES CLAI M OF DEDUCTION U/S. 80IB(10). GROUNDS RAISED ARE DISMISSED. 6. IN THE RESULT, THE DEPARTMENTS APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF MAY, 2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI; DATED : 9 TH MAY, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI