ITO, Ward-8(3), Hyderabad, Hyderabad V. Prasanth Sai Builders, Hyderabad, Hyderabad

ITA 1639/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2429 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P V SUBBA RAJU
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1639/HYD/2016 ASSESSMENT YEAR : 2012-13 INCOME TAX OFFICER, WARD 8(3), HYDERABAD. M/S PRASHANT SAI BUILDERS, HYDERABAD. PAN AAHFP6577A (APPELLANT) (RESPONDENT) REVENUE BY SHRI P.V. SUBBARAJU ASSESSEE BY SHRI K.C. DEVDAS DATE OF HEARING 14-06-2017 DATE OF PRONOUNCEMENT 16-06-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST ORDER DATED 28/07/2016 OF CIT(A) -2, HYDERABAD FOR THE A SSESSMENT YEAR 2012-13, WHEREIN THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: (I) THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS I N LAW AS WELL AS FACTS OF THE CASE. (II) THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) DESPITE THE FACT THAT PROJE CT WAS NOT COMPLETED BY THE STIPULATED TIME I.E. 31.03.2008. (III) THE HON'BLE CIT(A) ERRED IN LAW IN GRANTING R ELIEF TO THE ASSESSEE BASING I ON THE CERTIFICATE ISSUED BY THE ZONAL COMMISSIONER, GHMC, WHICH IS AGAINST THE BASIS ON T HE INFORMATION FURNISHED BY THE ASSESSEE. (IV) THE HON'BLE CIT(A) ERRED IN IGNORING THE INFOR MATION FURNISHED BY THE DY. COMMISSIONER, GHMC IN WHICH IT IS CLEARLY 2 ITA NO. 1639H/16 M/S PRASHANT SAI BUILDERS MENTIONED THAT CONSTRUCTION OF THE PROJECT IS STILL IN PROGRESS AS ON THE DATE OF INFORMATION FURNISHED 22/03/2010. 2. THE ASSESSEE IS A FIRM CARRYING ON THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL FLATS. FOR THE ASST. YEAR 2012-13 TH E ASSESSEE FIRM DECLARED TOTAL INCOME OF RS.10,83,800/-. WHILE COMP UTING THE TOTAL INCOME THE ASSESSEE CLAIMED DEDUCTION U/S.80IB(10) OF RS.47,34,628/- IN RESPECT OF THE INCOME EARNED IN T HE HOUSING PROJECT. THE CASE WAS TAKEN UP FOR SCRUTINY. ORDER U/S.143(3 ) WAS PASSED ON 02.03.2015. WHILE COMPUTING THE TOTAL INCOME, THE A SSESSING OFFICER DISALLOWED THE CLAIM MADE BY THE ASSESSEE U/S.80IB( 10) OF THE IT ACT ON THE GROUND THAT THE PROJECT WAS NOT COMPLETED BY 31.03.2008 AS ENVISAGED UNDER THE RELEVANT PROVISION. FURTHER, TH E ASSESSING OFFICER ESTIMATED THE PROFIT ON M/S. BHANU ELITE AND VILLAS AT HAFEEZPET AT 12% ON GROSS RECEIPTS AGAINST 11 % DECLARED BY THE ASSESSEE. THUS THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME AT RS. 61,40,327/-. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT THE EL IGIBILITY OF THE ASSESSEE FOR DEDUCTION U/S.80IB(10) OF THE IT ACT W AS A POINT FOR CONSIDERATION FOR ASST. YEARS 2004-05 TO 2008-09. T HE HON'BLE CIT(A) ALLOWED THE APPEALS FILED BY THE ASSESSEE FOR THE A SST. YEARS 2008-09 AND 2009-10. THE HON'BLE ITAT, HYDERABAD CONFIRMED THE DECISION OF THE HON'BLE CIT(A). THE CLAIM U/S.80IB(10) IS IN RE SPECT OF SALE PROCEEDS OF THE SAME HOUSING PROJECT WHICH WAS COMP LETED BY 31.03.2008. 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSES SEES OWN CASE FOR AYS 2006-07 TO 2011-12, DIRECTED THE AO TO ALLOW T HE ASSESSEES CLAIM FOR DEDUCTION OF RS. 47,34,628/- U/S 80IB(10) OF THE ACT. 4.1 AS REGARDS THE ACTION OF THE AO IN ESTIMATING T HE INCOME OF THE ASSESSEE AT 12% OF THE GROSS RECEIPTS IN RESPECT OF BHANU ELITE PROJECT AS AGAINST 11% CLAIMED BY THE ASSESSEE, THE CIT(A) DIRECTED 3 ITA NO. 1639H/16 M/S PRASHANT SAI BUILDERS TO THE AO TO ADOPT THE PROFIT @ 11% AS ADMITTED BY THE ASSESSEE BY OBSERVING THAT AO HAS NOT BROUGHT ON RECORD ANY SPE CIFIC DEFECTS WHICH COULD ENABLE THE AO TO REJECT THE BOOKS OF AC COUNT. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US AGAINST THE ACTION OF THE CIT(A) IN ALLOW ING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEA RS. IN AYS 2006-07 & 2009-10, THE COORDINATE BENCH IN ITA NOS. 416 & 4 17/HYD/2014 VIDE ORDER DATED 30/06/2014 OBSERVED AS UNDER: 8. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE RECORD. AT THE OUTSET, LEARNED AR SUBM ITTED BEFORE US THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION B EFORE THE COORDINATE BENCH OF ITAT, HYDERABAD IN ASSESSEES O WN CASE FOR AYS 2007-08 AND 2008-09 IN ITA NOS. 696 & 697/H YD/2013 AND THE ITAT VIDE ORDER DATED 22/01/2014, ALLOWED C LAIM OF DEDUCTION U/S 80IB(10), A COPY OF WHICH IS PLACED O N RECORD. THIS FACT HAS NOT BEEN CONTROVERTED BY LEARNED DR. ON A PERUSAL OF THE AFORESAID ORDER OF THE COORDINATE BE NCH IT IS TO BE SEEN, DEPARTMENTS APPEAL AGAINST ORDER OF CIT(A) A LLOWING ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) WAS DISM ISSED WITH THE FOLLOWING OBSERVATIONS: 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE HOUSING PROJECT PLAN WAS APPROVED BY THE CONCERNED AUTHORITY ON 10.03.2004 AND DUE DATE FOR COMMENCEMENT OF PROJECT WAS 31.03.2008. SINCE THIS IS A CRUCIAL DATE, THE PRE-AMENDED SECTION 80IB OF THE ACT AS ST OOD AT THE TIME OF GETTING APPROVAL FROM THE LOCAL AUTHORITY I S APPLICABLE. AS PER PROVISIONS OF SECTION 80IB(10) I NCOME-TAX ACT, 1961 AN UNDERTAKING WHICH DEVELOPS AND BUILDS HOUSI NG PROJECTS APPROVED BEFORE 31.3.2007 BY A LOCAL AUTHORITY IS E LIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT SUBJECT TO THE F OLLOWING CONDITIONS: 'I) IN A CASE WHERE THE HOUSING PROJECT HAS BEEN AP PROVED BY THE LOCAL AUTHORITY BEFORE 01-04-2004, THE CONST RUCTION SHOULD BE COMPLETED ON OR BEFORE 31-03-2008. IN A C ASE WHERE THE APPROVAL FROM LOCAL AUTHORITY IS OBTAINED ON OR 4 ITA NO. 1639H/16 M/S PRASHANT SAI BUILDERS AFTER 01-04-2004, THE CONSTRUCTION SHOULD BE COMPLE TED WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR I N WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHOR ITY. II) THE HOUSING PROJECT IS CONSTRUCTED ON A PLOT OF LAND WHICH HAS A MINIMUM AREA OF 1 ACRE. III) THE RESIDENTIAL UNITS CONSTRUCTED IN THE HOUSI NG PROJECT HAVE A MAXIMUM BUILT UP AREA OF 1500 SQ. FT. WHERE SUCH UNITS ARE SITUATED IN PLACES OTHER THAN DELHI OR MU MBAI. IV) THE BUILT-UP AREA OF SHOPS AND OTHER COMMERCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECTS DOE S NOT EXCEED 5% OF THE AGGREGATE BUILT-UP AREA OF THE HOU SING PROJECT OR 2000 SQ. FT., WHICHEVER IS LESS.' 18. IN THE PRESENT CASE, THE BUILDING PLAN APPROVAL WAS OBTAINED ON 10.3.2004 AND THERE IS NO DISPUTE ON THIS ISSUE. BEING SO, THE PROVISIONS AS STOOD DURING THE A.Y. 2004-05 ARE APP LICABLE WHICH READ AS FOLLOWS: '80IB(10): THE AMOUNT OF PROFITS IN CASE OF AN UNDE RTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY, S HALL BE HUNDRED PER CENT OF THE PROFITS DERIVED IN ANY PREV IOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING P ROJECT IF,- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998; (B) THE PROJECT IS ON THE SIZE OF A PLOT OF LAND WH ICH HAS A MINIMUM AREA OF ONE ACRE; AND (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITIES OF DELHI OR MUMBAI OR WITHIN TWEN TY-FIVE KILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIE S AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE.' 19. AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 80IB(10)(A) OF THE ACT, PRIOR TO THE AMENDMENT, THERE WAS NO SUCH REQUIREMENT AS REGARDS FURNISHING OF COMPLETION CERTIFICATE AND THE DEDUCTION PROVISION POINTED OUT TO THE GRANT OF 100% DEDUCTIO N ON THE PROFITS DERIVED FROM A HOUSING PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPMENT AND CONSTRUCTION OF THE HOUSI NG PROJECT ON OR AFTER 1ST OCTOBER, 1998. THUS, TILL 2005, TH ERE WAS NO CLAUSE DEALING WITH COMPLETION, IN WHICH EVENT, ONE CANNOT READ INTO THE 5 ITA NO. 1639H/16 M/S PRASHANT SAI BUILDERS PROVISION AS A CONDITION, WHICH IS NOT SPECIFICALLY PROVIDED FOR THEREIN. 20. AS FAR AS THE PRESENT CASE IS CONCERNED, THOUGH THE ASSESSEE'S CASE IS RELATED TO A.YS. 2007-08 AND 200 8-09, THE PROJECT WAS GOT APPROVED BY THE CONCERNED LOCAL AUT HORITY BEFORE 1.4.2004. THE PROVISIONS OF SECTION 80IB AS STOOD P RIOR TO THE AMENDMENT ARE APPLICABLE TO THE ASSESSEE'S CASE. AS THE SUBSTITUTION OF EXPLANATION TO CLAUSE (A) TO SUBSEC TION (10) OF SECTION 80IB OF THE INCOME-TAX ACT, 1961 WAS BROUGH T IN UNDER FINANCE (NO. 2) ACT OF 2004, EFFECTIVE FROM 1.4.200 5. THUS, IN THE ABSENCE OF ANY SUCH REQUIREMENT READ INTO THE SECTI ON, WE FIND IT DIFFICULT TO ACCEPT THE OBSERVATION OF THE AO THAT THE CLAIM FOR DEDUCTION WAS REJECTED ON THE GROUND THAT THE ASSES SEE HAD NOT FURNISHED THE COMPLETION CERTIFICATE. BEING SO, IN THE ABSENCE OF ANY REQUIREMENT U/S. 80IB(10)(A) OF THE ACT AND GOI NG BY THE PROVISIONS AS APPLICABLE TO THE RELEVANT ASSESSMENT YEAR, IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE DEPARTMEN T THAT THE CLAIM OF DEDUCTION HAS TO BE ALLOWED TO THE ASSESSEE ONLY ON PRODUCTION OF COMPLETION CERTIFICATE. 21. FURTHER, OUR VIEW IS SUPPORTED BY JUDGEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT VS. JAIN HOUSING & CONSTRU CTION LTD., REPORTED IN 214 TAXMAN 178, WHEREIN THEIR LORDSHIPS HELD AS UNDER: '9. AS IS EVIDENT FROM THE SUBSTITUTION OF SECTION 80IB(10) (1) OF THE ACT, PRIOR TO THE AMENDMENT, THERE WAS N O SUCH REQUIREMENT AS REGARDS FURNISHING OF COMPLETION CER TIFICATE AND THE DEDUCTION PROVISION POINTED OUT TO THE GRAN T OF 100% DEDUCTION ON THE PROFITS DERIVED FROM A HOUSIN G PROJECT, IF THE UNDERTAKING HAD COMMENCED DEVELOPME NT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER 1 ST OCTOBER, 1998. THUS, TILL 2005, THERE WAS NO CLAUSE DEALING WITH COMPLETION, IN WHICH EVENT, ONE CANNOT READ INTO THE PROVISION AS A CONDITION, WHICH IS NOT SPE CIFICALLY PROVIDED FOR THEREIN. 10. AS FAR AS THE PRESENT CASE IS CONCERNED, IT REL ATES TO THE ASSESSMENT YEAR 2004-05. THE SUBSTITUTION OF EXPLANATION TO CLAUSE (A) TO SUB-SECTION (10) OF SE CTION 80IB OF THE INCOME TAX ACT WAS BROUGHT IN UNDER FIN ANCE NO.(2) ACT OF 2004, EFFECTIVE FROM 01.04.2005. THUS , IN THE ABSENCE OF ANY SUCH REQUIREMENT READ INTO THE SECTI ON, WE FIND IT DIFFICULT TO ACCEPT THE CASE OF THE REVENUE THAT THE CLAIM FOR DEDUCTION HAS TO BE REJECTED ON THE GROUN D THAT THE ASSESSEE HAD NOT FURNISHED THE COMPLETION CERTI FICATE. LEAVING THAT ASIDE, AS IS EVIDENT FROM THE READING OF THE COMMISSIONER'S ORDER, IN ANY EVENT, THE ASSESSEE HA D 6 ITA NO. 1639H/16 M/S PRASHANT SAI BUILDERS PRODUCED THE COMPLETION CERTIFICATE IN RESPECT OF T HE PROJECTS JAINS SAGARIKA, MRC NAGAR, CHENNAI AND JAI NS SWARNAKAMAL, VADAPALANI, CHENNAI AND THE PROJECTS A T VELACHERRY, CHITLAPAKKAM AND VIRUGAMBAKKAM. AS FAR AS THE PROJECTS AT MANAPAKKAM AND PALLAVARAM ARE CONCERNED, IF THE ASSESSEE HAD SUBMITTED CERTIFICAT ES FROM SEWERAGE AND ELECTRICITY BOARD, WHICH ACCORDING TO THE COMMISSIONER WOULD NOT SATISFY THE REQUIREMENT OF THE RULES, AS ALREADY POINTED OUT, I N THE ABSENCE OF ANY REQUIREMENT UNDER SECTION 80IB(10)( A) OF THE INCOME TAX ACT AND GOING BY THE PROVISION, AS I T STOOD DURING RELEVANT ASSESSMENT YEAR, 2004-05, IT IS DIF FICULT TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE CLAIM FOR DEDUCTION RESTED ON THE ASSESSEE'S PRODUCTION OF COMPLETION CERTIFICATES.' 22. IN VIEW OF THE ABOVE DISCUSSION, THERE IS NO IN FIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS TO BE CONFIRMED . 23. FURTHER THERE IS A CONTROVERSY REGARDING ISSUE OF COMPLETION CERTIFICATE BY THE ZONAL COMMISSIONER, VIDE HIS LET TER DATED 26.2.2010. ADMITTEDLY, THERE WAS A CERTIFICATE ISSU ED BY ZONAL COMMISSIONER, GHMC, WEST ZONE, SERILINGAMPALLY WHIC H WAS DISCUSSED BY THE CIT(A) IN PARA 6 OF HIS ORDER FOR A.Y. 2008- 09. CONTRARY TO THIS, THERE IS ONE MORE LETTER ISSUED B Y THE DEPUTY COMMISSIONER, CIRCLE 12, WEST ZONE, SERILINGAMPALLY VIDE HIS LETTER DATED 22.3.2010. ACCORDING TO THIS LETTER, T HERE WAS NO COMPLETION CERTIFICATE ISSUED BY THE AUTHORITIES CO NCERNED. IN OUR OPINION, THE CONTROVERSY ON ISSUE OF COMPLETION CER TIFICATE IS IRRELEVANT AT THIS POINT OF TIME IN VIEW OF THE JUD GEMENT OF MADRAS HIGH COURT IN THE CASE OF CIT VS. JAIN HOUSING & CO NSTRUCTION LTD. (CITED SUPRA), THOUGH THE CERTIFICATE ISSUED BY THE ZONAL COMMISSIONER IS TO BE CONSIDERED AS PROPER. 24. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 9. IN THE APPEAL BEFORE US, THE AO HAS WITHDRAWN DE DUCTION U/S 80IB(10) FOLLOWING THE ASSESSMENT ORDER PASSED FOR AY 2008-09. HOWEVER, SINCE THE COORDINATE BENCH HAS UP HELD ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) FOR AY 2 007-08 AND 2008-09, WE DO NOT FIND ANY REASON TO DENY SUCH CLA IM OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. THEREFOR E, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH REFERRED TO ABOVE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) BY DISMISSING THE GROUND RAISED BY DEPARTMENT. 6.1 SINCE THE ISSUE IN THE AY UNDER CONSIDERATION I S MATERIALLY IDENTICAL TO THAT OF EARLIER YEARS IN ASSESSEES OW N CASE (SUPRA), WE UPHOLD THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO ALLOW THE 7 ITA NO. 1639H/16 M/S PRASHANT SAI BUILDERS ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) OF THE A CT, AS THE CIT(A)S DECISION IS IN CONSONANCE WITH THE DECISION OF TRIB UNAL IN ASSESSEES OWN CASE IN EARLIER YEARS AND DISMISS THE GROUNDS R AISED BY THE REVENUE IN THIS REGARD. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 16 TH JUNE, 2017 KV COPY TO:- 1) ITO, WARD 8(3)ROOM NO. 609, 6 TH FLOOR, SIGNATURE TOWERS, HYDERABAD 500 084 2) M/S PRASHANT SAI BUILDERS, 3 RD FLOOR, WHISTLING WOODS, BHANU TOWNSHIP.HAFEEZPET, HYDERABAD. 3) CIT(A) 2, HYDERABAD. 4) THE PR. CIT- 2, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD. 6) GUARD FILE