Assistant Commissioner of Income-tax, Bangalore V. M/s Majestic Developers, Bangalore

ITA 1628/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7513 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Corroborative evidences
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.1628 & 1 629/BANG/2016 (ASST. YEAR 2007-08 & 2008-09) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 4(3)(1), BENGALURU. . APPELLANT VS. M/S MAJESTIC DEVELOPERS, NO.67/3, SARAKKI GATE, KANAKAPURA MAIN ROAD, BANGALORE. . RESPONDENT PAN AADFD1191J. APPELLANT BY : MS. NEERA MALHOTRA, CIT RESPONDENT BY : SHRI K.R VASUDEVAN, ADVOCATE DATE OF HEARING : 11-10-2017 DATE OF PRONOUNCEMENT : -10-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THESE APPEALS BY REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-4, BANGALORE DATED 20/3/2015 FOR BOTH ASST. YEARS 2007-08 AND 2008-09. THESE APPEALS WERE HEARD TOGETHER AND SIN CE COMMON ITA NOS.1628 & 1 629/B/16 2 ISSUES ARE INVOLVED, WE DEEM IT APPROPRIATE TO DISP OSE OFF THESE APPEALS BY WAY OF THIS COMBINED ORDER. 2 BRIEFLY STATED, THE FACTS RELEVANT FOR DISPOSAL O F THESE APPEALS ARE AS UNDER:- 2.1 THE ASSESSEE IS A FIRM ENGAGED IN BUSINESS AS A BUILDER AND DEVELOPER. 2.1.1 FOR ASST. YEAR 2007-08 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 24/10/2007 DECLARING INCOME OF RS 47,42,8 80/- AFTER CLAIMING DEDUCTION U/S 80-IB OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ACCEPTING THE RETURNED INCOME. SUBSEQUENT LY, RE- ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WERE INIT IATED BY THE ASSESSING OFFICER (AO) AS HE WAS OF THE VIEW THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX AND ESCAPED ASSESSMENT A S IT WAS WRONGLY ALLOWED DEDUCTION U/S 80-IB OF THE ACT DESPITE NOT FULFILLING THE CONDITIONS REQUIRED FOR BEING ALLOWED THE SAME, BY FAILING TO FURNISH THE COMPLETION CERTIFICATE OF THE HOUSING PROJECT C ONCERNED THEREBY NOT COMPLYING WITH THE PROVISIONS OF CLAUSE (II) OF EXPLANATION TO SECTION 80-IB(10) OF THE ACT. THE RE-ASSESSMENT WA S CONCLUDED U/S 143(3) R.W.S 147 OF THE ACT VIDE ORDER DATED 18/2/ 1015, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS. 4,51,96,3 03/- IN VIEW OF THE AO WITHDRAWING THE DEDUCTION OF RS. 4,04,53,423/- CLAIMED BY ITA NOS.1628 & 1 629/B/16 3 ASSESSEE U/S 80-IB OF THE ACT, WHICH WAS ALLOWED TO THE ASSESSEE IN THE ORIGINAL ORDER OF ASSESSMENT. 2.1.2 FOR ASST YEAR 2008-09 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 29/9/2008 DECLARING INCOME OF RS. 2,53,460/-, AF TER CLAIMING DEDUCTION U/S 80-IB OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY, AS IN THE ASSESSEES CASE FOR ASST. YEAR 2007-08, IN THIS ASST YEAR ALSO RE-ASSESSMENT PROCEEDINGS U/S 147 O F THE ACT WERE INITIATED FOR WITHDRAWING THE DEDUCTION ALLOWED TO THE ASSESSEE U/S 80- IB OF THE ACT IN THE ORIGINAL ORDER OF ASSESSMENT A S CLAIMED BY THE ASSESSEE. THE RE-ASSESSMENT PROCEEDINGS WERE CONCL UDED U/S 143(3) R.W.S 147 OF THE ACT VIDE ORDER DATED 18/2/2015, WH EREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.7,24,22,160/ -; IN VIEW OF THE AO WITHDRAWING THE DEDUCTION OF RS. 7,21,68,700/- C LAIMED BY THE ASSESSEE U/S 80-IB OF THE ACT WHICH WAS ALLOWED TO THE ASSESSEE IN THE ORIGINAL ORDER OF ASSESSMENT. 2.2 AGGRIEVED BY THE ORDERS OF RE-ASSESSMENT DATED 18/2/2015 ASST. YEARS 2007-08 AND 2008-09, THE ASSESSEE FILE D APPEALS BEFORE THE CIT(A)-4, BANGALORE CHALLENGING THE DISALLOWANCE OF ITS CLAIMS OF DEDUCTION U/S 80-IB OF THE ACT BY THE AO IN RE-ASSE SSMENT PROCEEDINGS. THE LD CIT(A) DISPOSED OFF THE APPEALS FOR ASST. YEARS 2007-08 AND 2008-09 BY SEPARATE ORDERS DATED 15/6/2 016 BY DIRECTING ITA NOS.1628 & 1 629/B/16 4 THE AO TO ALLOW THE ASSEESSEES CLAIMS FOR DEDUCTIO N U/S 80-IB OF THE ACT. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDERS OF THE C IT(A)-4, BANGALORE DATED 15/6/2016 FOR ASST. YEARS 2007-08 AND 2008-09, HAS FILED THESE APPEALS BEFORE THE TRIBUNAL, WHEREIN IT HAS RAISED THE FOLLOWING IDENTICAL GROUNDS CHALLENGING THE IMPUGNE D ORDERS OF THE CIT(A) IN ALLOWING THE ASSESSEES CLAIMS FOR DEDUCT ION U/S 80-IB OF THE ACT:- 1 . THE ORDER OF THE LD. CIT (A), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS OPPO SED TO LAW AND THE FACT AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT (A) HAS ERRED IN HOLDING THE PROJECT AS APPROVED ONE UNDER THE FACTS OF THE CASE. 3. THE LD.CIT (A) HAS ERRED IN ALLOWING THE DEDUCTI ON U/S 80-IB TREATING THE ISSUE LIBERALLY WHEN THE FACTS O F THE CASE ARE OTHERWISE. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE ITA NOS.1628 & 1 629/B/16 5 REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 3.2 THE LD DR FOR REVENUE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED (SUPRA). STRONG RELIANCE WAS PLACED BY THE D R ON THE RE- ASSESSMENT ORDERS OF THE AO FOR WITHDRAWING THE ASS ESSEES CLAIM FOR DEDUCTION U/S 80-IB OF THE ACT, IN VIEW OF THE NON FURNISHING OF THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY, AS STIPULATED IN THE PROVISIONS OF EXPLANATION (II) TO SECTION 80-IB(10) OF THE ACT. 3.3 PER CONTRA, THE LD AR FOR THE ASSESSEE PRAYED FOR UPHOLDING OF THE IMPUGNED ORDERS OF THE LD CIT(A) IN DIRECTING T HE AO TO ALLOW THE ASSESSEES CLAIMS FOR DEDUCTION U/S 80-IB OF THE AC T. ACCORDING TO THE LD AR OF THE ASSESSEE, THE AO SUMMARILY REJECTED T HE ASSESSEES CLAIMS FOR DEDUCTION U/S 80-IB OF THE ACT MERELY ON THE GROUND THAT THE COMPLETION CERTIFICATE WAS NOT OBTAINED; IGNOR ING THE FACTS OF THE CASE AND THE CORROBORATIVE EVIDENCES WHICH CLEARLY EVIDENCED THAT THE ASSESSEE HAD COMPLETED THE CONCERNED HOUSING PROJEC T, LIKE OBTAINING OF SANCTIONS/APPROVALS FOR WATER, ELECTRICITY AND S ANITARY CONNECTIONS FROM BESCOM, BWSSB AND BBMP RESPECTIVELY, WHICH ARE APPROVED ONLY FOR COMPLETED PROJECTS. IT SUBMITTED THAT THE LD CIT(A) HAS ALLOWED THE ASSESSEE DEDUCTION U/S 80-IB OF THE ACT ONLY AFTER EXAMINATION OF THE FACTS OF THE CASE AND THE JUDICI AL PRECEDENTS IN THIS ITA NOS.1628 & 1 629/B/16 6 REGARD TO HOLD THAT MERE ABSENCE OF COMPLETION CERT IFICATE IN ITSELF WOULD NOT BE SUFFICIENT CAUSE FOR DENIAL OF THE SAI D DEDUCTION. IN SUPPORT OF THE ASSESSEES CLAIM FOR DEDUCTION U/S 8 0-IB OF THE ACT, RELIANCE WAS, INTER ALIA, PLACED ON THE FOLLOWING J UDICIAL PRONOUNCEMENTS. (I) CIT V ITTINA PROPERTIES PVT. LTD., IN (2014) 49 TAXMAN.COM 201 (KAR)(HC) (II) KEERTHI ESTATES VS. ITO IN ITA NO.1854/HYD/201 4 DT 24/3/2016 (III) ITO VS. SAKET CORPORATION IN ITA N O.107 OF 2 015 DT 5/5/2015 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. THE SOLE ISSUE FOR ADJUDICATI ON BEFORE US IS WITH REGARD TO WHETHER THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION CLAIMED BY IT U/S 80-1B OF THE ACT FOR ASST. YEARS 2007-08 AND 2008- 09 IN RESPECT OF ITS RESIDENTIAL PROJECT MAJESTIC RESIDENCY. ON A CAREFUL PERUSAL OF THE IMPUGNED ORDERS OF THE LD CI T(A) FOR ASST. YEARS 2007-08 AND 2008-09, WE FIND THAT THE LD CIT(A) HAS ELABORATELY CONSIDERED THE AOS OBSERVATIONS AND FINDINGS, THE ASSESSEES SUBMISSIONS, THE FACTS OF THE CASE AND THE JUDICIAL PRECEDENTS IN THE MATTER, AT PARAS 5.1 O 5.5 OF THE IMPUGNED ORDER, BEFORE RENDERING HIS OBSERVATIONS/FINDINGS THEREON AT PARAS 6 TO 7 OF TH ESE ORDERS WHICH ARE EXTRACTED HEREUNDER:- ITA NOS.1628 & 1 629/B/16 7 ITA NOS.1628 & 1 629/B/16 8 ITA NOS.1628 & 1 629/B/16 9 ITA NOS.1628 & 1 629/B/16 10 3.4.2 A SIMILAR/IDENTICAL FACT SITUATION AND ISSUE WAS DEALT WITH BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V I TTINA PROPERTIES P LTD., (2014) 49 TAXMAN.COM 201 (KAR)(HC); WHEREIN THE HONBLE HIGH COURT ALLOWED THE ASSESSEES CLAIM FOR DEDUCTI ON U/S 80-IB OF THE ACT FOR THE PROJECT IN KARNATAKA ON THE GROUNDS THAT THERE IS NO PROVISION FOR ISSUE OF COMPLETION CERTIFICATE IN TH E BDA ACT OR THE KARNATAKA MUNICIPAL CORPORATION ACT. AT PARAS 6 TO 8 OF THE AFORESAID ORDER (SUPRA) THE HONBLE KARNATAKA HIGH COURT HELD AS UNDER:- ITA NOS.1628 & 1 629/B/16 11 ITA NOS.1628 & 1 629/B/16 12 ITA NOS.1628 & 1 629/B/16 13 3.4.3 THE AFORESAID DECISION OF THE HONBLE KARNATA KA HIGH COURT IN THE CASE OF ITTINA PROPERTIES P. LTD, (SUPRA) WAS F OLLOWED BY THE ITAT, HYDERABAD BENCH IN THE CASE OF KEERTHI ESTATES, HYD ERABAD IN ITA NO: 1854/HYD/2014 DATED 24/3/2016, WHEREIN AT PARA 6 THEREOF THE BENCH HELD AS UNDER:- ITA NOS.1628 & 1 629/B/16 14 ITA NOS.1628 & 1 629/B/16 15 3.4.4 TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTAN CES OF THE CASE AS DISCUSSED ABOVE FROM PARAS 3.4.1 TO 3.4.3 OF THIS O RDER, THE VIEWS OF THE AO, THE CONTENTIONS OF THE ASSESSEE, THE OBSERV ATIONS AND FINDINGS OF THE LD CIT(A) IN THE IMPUGNED ORDERS (SUPRA) AND THE JUDICIAL PRECEDENTS IN THIS REGARD (SUPRA), WE ARE OF THE CO NSIDERED VIEW THAT THE ISSUE OF FILING OF COMPLETION CERTIFICATE FOR B EING ALLOWED CLAIM OF DEDUCTION U/S 80-IB OF THE ACT, IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE KARNATAKA H IGH COURT IN THE CASE OF ITTINA PROPERTIES PVT. LTD., (SUPRA). RES PECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HONBLE KARNATAKA HIGH CO URT (SUPRA), WE UPHOLD THE ORDERS OF THE LD CIT(A) FOR BOTH ASST. Y EARS 2007-08 AND 2008-09 AND CONSEQUENTLY DIRECT THE AO TO ALLOW THE ASSESSEE DEDUCTION U/S 80-IB OF THE ACT WITHOUT INSISTING FO R THE ASSESSEE TO FILE COMPLETION CERTIFICATE. WE HOLD AND DIRECT ACCORDIN GLY. THE GROUNDS OF APPEAL RAISED BY REVENUE, BEING BEREFT OF MERIT , ARE DISMISSED. 4 IN THE RESULT, REVENUES APPEALS FOR ASST. YEARS 2007-08 AND 2008-09 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER, 2017 . SD/- SD/- (N.V VASUDEVAN) (JASO N P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : 20/10/2017 VMS ITA NOS.1628 & 1 629/B/16 16 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETARY, ITAT, BANG ALORE