ITO, Ward 11(4), Pune V. M/s. Suyog Shivalaya, Pune

ITA 1642/PUN/2013

• Counselvise Citation: 164224514 RSA 2013
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: MAHENDRA MEHTA
• Section: 80IB

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 NO.1642/PN/2013 (A.Y: 2010-11) ITO, WARD 11(4), PUNE APPELLANT VS. M/S. SUYOG SHIVALAYA 27, PARSHWA BUILDING, SUJAY GARDEN, MUKUND NAGAR, PUNE 411037 PAN: AACAS1030R RESPONDENT ASSESSEE BY : S/SHRI MAHEND RA MEHTA & BHARAT SHAH DEPARTMENT BY : SHRI A.K. MODI, CIT DATE OF HEARING: 21.08.2014 DATE OF ORDER : 28.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, PUNE DATE D 07.06.2013 FOR A.Y. 2010-11 ON THE FOLLOWING GROUND S. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN SUBSTANTIALLY DELETING THE DISALLO WANCE MADE BY THE ASSESSING OFFICER OF THE ASSESSEE'S CLA IM OF DEDUCTION OF RS.9,70,47,097/- IN RESPECT OF THE HOU SING PROJECT 'SUYOG SHIVALAYA' INSTEAD OF ENTIRELY CONFI RMING THE SAID DISALLOWANCE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE ASSESSEE IS ENTIT LED TO PRO RATA DEDUCTION U/S.80IB(10) IN RESPECT OF THE E LIGIBLE RESIDENTIAL UNIT IN THE SUYOG SHIVALAYA PROJECT 2 ITA NO.1642/PN/13 SUYOG SHIVALAYA NOTWITHSTANDING THAT TWO UNITS IN THIS PROJECT DO N OT CONFORM TO THE CONDITIONS CONTAINED IN SECTION 80IB (10). 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN INTERPRETING SECTION 80IB(10) IN H ER OWN WAY TO ALLOW PROPORTIONATE DEDUCTION WHEREAS NO SUC H PROPORTIONATE OR PRO RATA DEDUCTION IS CONTEMPLATED OR PROVIDED FOR IN THE STATUTE; AND, ON THE CONTRARY, DEDUCTION IS ADMISSIBLE ONLY ON CUMULATIVE FULFILLM ENT OF ALL THE CONDITIONS BY A PROJECT. 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE ID. COMMISSIONER OF INCOME-TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF THE APPELLAT E PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 2. THE ASSESSEE IS A BUILDER AND DEVELOPER. DURING THE IMPUGNED ASSESSMENT, IT HAS UNDERTAKEN ONE PROJECT NAMELY SUYOG SHIVALAYA AT SY. NO.129, PARVATI NORTH, PUN E. THE PROJECT COMPRISES TWO RESIDENTIAL BUILDINGS 'A' (RUDRAKSH) AND 'B' (NEELMANI). IT CLAIMED ENTIRE PROFITS EARNED ON SA LE OF FLATS IN THESE BUILDINGS OF RS.9,70,47,097/- AS DEDUCTION U/ S 80IB(10) OF THE ACT FOR THE YEAR. THE ASSESSING OFFICER COMMIS SIONED THE SERVICES OF SHRI. NITIN LELE, REGISTERED VALUER FOR VERIFYING WHETHER ASSESSEE FULFILLED ALL THE CONDITIONS FOR T HE CLAIM OF DEDUCTION. WHILE IT WAS REPORTED THAT THE ASSESSEE SATISFIED ALL THE OTHER CONDITIONS PRESCRIBED U/S 80IB(10) OF THE ACT, IT WAS FOUND THAT FLAT NOS. A-103 AND A-104 IN BUILDING A (RUDRAKSH) WERE ADMEASURING 1629.56 SQ. FT. THE STAND OF THE ASSESSEE BEFORE THE ASSESSING OFFICER HAS BEEN THAT ALTHOUGH THE FLATS A- 103 AND A-104 WERE IN EXCESS OF THE PRESCRIBED AREA , THE ASSESSEE WAS ENTITLED TO PROPORTIONATE DEDUCTION. SINCE THERE WAS NO PROVISION IN THE ACT TO ALLOW THE CLAIM U/S. 80IB(10) OF THE ACT PROPORTIONATELY, THE ENTIRE CLAIM OF THE ASSESS EE AMOUNTING TO RS.9,70,47,097/- WAS DISALLOWED. 3 ITA NO.1642/PN/13 SUYOG SHIVALAYA 2.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF THE ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) ALLOWED THE PROPORTIONATE DEDUCTION TO THE ASSESSEE. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF THE REVENUE, INTER A LIA, SUBMITTED THAT THE CIT(A) ERRED IN SUBSTANTIALLY DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF THE ASSESSEE'S CLA IM OF DEDUCTION OF RS.9,70,47,097/- IN RESPECT OF THE HOU SING PROJECT 'SUYOG SHIVALAYA' INSTEAD OF ENTIRELY CONFIRMING TH E SAID DISALLOWANCE. THE CIT(A) GROSSLY ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO PRO RATA DEDUCTION U/S.80IB (10) IN RESPECT OF THE ELIGIBLE RESIDENTIAL UNIT IN THE SUYOG SHIVA LAYA PROJECT NOTWITHSTANDING THAT TWO UNITS IN THIS PROJECT DO N OT CONFORM TO THE CONDITIONS CONTAINED IN SECTION 80IB(10). ACCO RDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZE D REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A). 2.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT THE DISPUTE BETWEEN THE DEPART MENT AND THE ASSESSEE RELATES TO THE TWO FLATS A-103 AND A-104 I N THE HOUSING PROJECT IN QUESTION. THE STAND OF THE ASSESSEE HAS BEEN THAT THE FLATS WERE CONSTRUCTED AND COMPLETED AS PER SANCTIO NED PLAN AND THEY WERE SOLD AS PER SANCTIONED PLAN. ALTHOUGH, T HE COMMISSION HAS REPORTED FLAT NOS.A-103 AND A-104 AS HAVING ARE A OF 1629.56 SQ.FT. THE TOTAL BUILT UP AREA AS PER SECTION 80IB( 14)(A) IS ONLY 1438.81 SQ.FT. THE DEFINITION OF BUILT UP AREA HAS BEEN BROUGHT IN TO THE STATUTE BY THE EXPRESS PROVISIONS OF SECT ION 80IB(14) BY THE FINANCE ACT (NO.2) 2004 WITH EFFECT FROM 01.04. 2005. IN VIEW OF THE SAME, THE PUNE BENCH OF ITAT IN D.S. KULKARN I DEVELOPERS LTD. VS ACIT IN ITA NO 1428/PN/2008 HAS HELD THAT T HE DEFINITION OF BUILT UP AREA AS INTRODUCED IN THE ST ATUTE WILL NOT 4 ITA NO.1642/PN/13 SUYOG SHIVALAYA APPLY TO THE PROJECTS APPROVED PRIOR TO THE DATE OF ITS INTRODUCTION I.E. 01.04.2005 AND THAT THE EXPRESSION WOULD HAVE TO BE UNDERSTOOD IN ACCORDANCE WITH THE RULES OF THE LOCA L AUTHORITY. IN THE PRESENT CASE, THE HOUSING PROJECT HAS BEEN S ANCTIONED ONLY ON 10.03.2006 AND WHAT IS RELEVANT IS NOT THE SANCT IONED PLAN BY THE LOCAL AUTHORITY BUT THE ACTUAL MEASUREMENTS AS PER THE DEFINITION OF BUILT UP AREA. THE COMMISSION REPORT BASED ON PHYSICAL INSPECTION INDICATES THAT THE BUILT UP ARE A IS MORE THAN 1500 SQ. FT. THEREFORE EVEN IF THE OCCUPANCY (COMPL ETION) CERTIFICATE SHOWS THAT THE FLAT IS LESS THAN 1500 S Q.FT., IT IS CLEAR THAT THERE HAS BEEN AN INFRINGEMENT OF BUILT UP ARE A. SO, IT WAS FOUND THAT THE VIOLATION OF PROVISIONS OF SECTION 8 0IB(10) OF THE ACT AS FAR AS THE SIZE OF THE FLAT IS CONCERNED. 2.3 COMING TO ALTERATIVE GROUND THAT IN CASE FULL D EDUCTION U/S.80IB(10), THE ASSESSEE SHOULD BE GRANTED PRORAT A DEDUCTION IN RESPECT OF ELIGIBLE RESIDENTIAL UNITS. THE ISSU E OF PRO RATA DEDUCTION HAS BEEN APPROVED BY VARIOUS JUDICIAL AUT HORITIES NAMELY, MADRAS HIGH COURT IN THE CASE OF VISHWAS PR OMOTERS PVT. LTD. VS ACIT REPORTED IN 81 DTR 68 AND CIT VS ARUN EXCELLO FOUNDATIONS (P) LTD. REPORTED IN 29 TAXMAN.COM 149 AND THE SAME VIEW HAS BEEN TAKEN BY THE HONBLE CALCUTTA HI GH COURT IN BENGAL AMBUJA HOUSING DEVELOPMENTS LTD. VS CIT (APP EAL NO. 1595 (KOL) OF 2005). MOREOVER, THE SAME VIEW WAS F OLLOWED BY ITAT, PUNE IN THE CASE OF D.S.KULKARNI DEVELOPERS P VT. LTD. IN VIEW OF ABOVE JUDICIAL PRONOUNCEMENTS, THE CIT(A) W AS JUSTIFIED IN DECIDING THE ISSUE OF ALLOWABILITY OF PRORATA DEDUC TION TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT IN FAVOUR O F THE ASSESSEE, IN CASE OF OTHER CONDITIONS STIPULATED U/S.80IB(10) AR E NOT VIOLATED. THUS, THE ASSESSING OFFICER WAS RIGHTLY DIRECTED TO WORK OUT THE CLAIM OF DEDUCTION U/S 80IB(10) IN RESPECT OF FLAT A-103 AND A- 104 AND ALLOWED THE CLAIM. THIS REASONED FINDING O F CIT(A), WHEREIN THE CIT(A) CLEARLY HELD THAT THE ASSESSEE I S ENTITLED TO 5 ITA NO.1642/PN/13 SUYOG SHIVALAYA PRORATA DEDUCTION U/S.80IB(10) IN RESPECT OF ELIGIB LE RESIDENTIAL UNITS IN SUYOG SHIVALAYA PROJECT, NEEDS NO INTERFER ENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF AUGUST, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-I, PUNE 4) THE CIT-I, 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