ACIT, Central Circle 2(2), Pune V. M/s. Rohan Homes, Pune

ITA 1700/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84966 (ITAT-PUNE)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKULESH DUBE
• Assessee Lawyers: R G NAHAR
• Keywords: Search and seizure
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1700/PN/2013 (ASSESSMENT YEAR : 2007-08) ACIT CENTRAL CIRCLE-2(2), PUNE .. APPELLANT VS. M/S. ROHAN HOMES, 8 & 9, 813, PRADEEP CHAMBERS, BHANDARKAR INSTITUTE ROAD, PUNE 411001 .. RESPONDENT PAN NO.AAHFR4916K ASSESSEE BY : SHRI R.G. NAHAR REVENUE BY : SHRI MUKULESH DUBE DATE OF HEARING : 01-09-2014 DATE OF PRONOUNCEMENT : 05-09-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 20-06-2013 OF THE CIT(A) CENTRAL, PUNE RELATI NG TO ASSESSMENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS PROMOTERS AND DEVELOPERS. A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME T AX ACT WAS CONDUCTED IN THE ROHAN GROUP OF CASES ON 27-10-2010 . THE ASSESSEE IS A PART OF THIS GROUP. IN RESPONSE TO N OTICE U/S.153A OF THE I.T. ACT, THE ASSESSEE FILED THE RETURN OF INCO ME ON 30-06-2011 DISCLOSING NIL INCOME. 2 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTI ON U/S.80IB(10) OF THE I.T. ACT AMOUNTING TO RS.14,28,01,695/-. HE , THEREFORE, ASKED THE ASSESSEE TO JUSTIFY WITH DOCUMENTARY PROO F IN RESPECT OF THE CLAIM MADE U/S.80IB(10) FOR THE IMPUGNED ASSESS MENT YEAR AND ALSO TO EXPLAIN AS TO WHY THE SAID CLAIM SHOULD NOT BE DISALLOWED IN VIEW OF THE EARLIER ASSESSMENT ORDER PASSED BY THE THEN ASSESSING OFFICER WHICH HAS BEEN CONFIRMED BY THE CIT(A). RE JECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND OBSE RVING THAT THE CLAIM WAS DENIED BY THE ASSESSING OFFICER IN THE OR IGINAL ASSESSMENT ORDER DUE TO NON COMPLETION OF THE ENTIR E PROJECT WHICH HAS BEEN UPHELD BY THE CIT(A) THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSE SSEE HAD PREFERRED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE THEN CIT(A) AND THE TRIBUNAL VIDE ITA NO.423/PN/2011 ORD ER DATED 31- 01-2013 HAS ALLOWED THE CLAIM OF DEDUCTION U/S.80IB (10) OF THE I.T. ACT. IT WAS ACCORDINGLY ARGUED THAT SINCE THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL, THEREFOR E, THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE SINCE NO NEW F ACT HAS COME TO THE NOTICE OF THE DEPARTMENT AFTER THE SEARCH. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE FOR THE SAME ASSESSMENT YEAR, THE LD.CIT(A) DIRECTED THE AS SESSING OFFICER TO ALLOW PROPORTIONATE DEDUCTION AS DIRECTE D BY THE TRIBUNAL 3 BY OBSERVING AS UNDER : 5.3 I HAVE GIVEN CAREFUL CONSIDERATION TO ALL THE F ACTS BEFORE ME AND HAVE ALSO PERUSED THE ORDER PASSED BY THE HON. ITAT IN TH E APPELLANT'S OWN CASE IN APPEAL AGAINST THE ORIGINAL ORDER. THE OPERA TIVE PORTION OF THE SAID ORDER IS REPRODUCED BELOW: '12. IN THIS CASE, FACTUALLY, IT IS NOT IN DISPUTE THAT SO FAR AS THE BUILT-UP AREA OF 17 FLATS IS CONCERNED, THE SAME I S BEYOND THE LIMIT PRESCRIBED IN CLAUSE (C) TO SECTION 80-IB (10) OF THE ACT. THE PLEA OF THE ASSESSEE IS THAT THE ENTIRE PROJECT COUL D NOT BE HELD INELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE A CT. THE ASSESSEE CONTENDS THAT THE DEDUCTION U/S 80-IB(10) OF TH E ACT BE ALLOWED WITH RESPECT TO THE PROFITS DERIVED FROM THE DEVELOPMENT AND CONSTRUCTION OF RESIDENTIAL UNITS I N THE SAID PROJECT WHICH FULFIL THE REQUIREMENT OF BUILT-UP AR EA SPECIFIED IN CLAUSE (C.) TO SEC. 80-IB(10) OF THE ACT. IN OTHER WORDS, AS PER THE ASSESSEE, THE DEDUCTION U/S.80-IB(10) BE ALLOWED PR O-RATA TO THE INCOME FROM THE UNITS QUALIFYING IN TERMS OF SEC. 8 0-IB(10)(C) OF THE ACT. 13. THE CALCUTTA BENCH OF THE TRIBUNAL IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. (SUPRA) HELD AS UND ER: 'IT IS APPARENT FROM THE PERUSAL OF SEC. 80-IB(10) THAT THIS SECTION HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCE NTIVE FOR BUSINESSMEN TO UNDERTAKE CONSTRUCTION OF RESIDENT IAL ACCOMMODATION FOR SMALLER RESIDENTIAL UNITS AND THE DEDUCTION IS INTENDED TO BE RESTRICTED TO THE PROFIT DERIVED FROM THE CONSTRUCTION OF SMALLER UNITS AND NOT FROM LARGER RESIDENTIAL UNITS. THOUGH THE AO HAS DENIED THE CLAI M OF THE ASSESSEE OBSERVING THAT LARGER UNITS WERE ALSO CONSTRUCT ED BY THE ASSESSEE, AT THE SAME TIME, IT IS SMALLER RESID ENTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS CONTAIN ED IN SEC. 80- IB(10) AND THE SAME HAS NOT BEEN DISPUTED BY THE AO ALSO. WE HAVE ALSO NOTED DOWN THE FACT THAT EVEN THE PROVISIO N AS LAID DOWN IN SEC. 80-1IB(10) FROM A HOUSING COMPLEX CONTA INING BOTH THE SMALLER AND LARGE RESIDENTIAL UNITS AND SINCE THE ASSESSEE HAS ONLY CLAIMED DEDUCTION ON ACCOUNT OF SMALLE R QUALIFYING UNITS BY FULFILLING ALL THE CONDITIONS AS L AID DOWN UNDER SECTION 80-IB(10), THE DENIAL OF CLAIM BY THE ASSESSEE IS ON ACCOUNT OF RATHER RESTRICTED AND NARROW INTERP RETATION OF PROVISIONS OF CLAUSE (C) OF SEC. 80-IB(10) WHILE CO MING TO SUCH CONCLUSION, WE ALSO FIND SUPPORT FROM THE ORDER OF TH E HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. (SUPRA) WHEREIN IT WAS HELD THAT PROVISIONS SHOULD BE INTERPRETED LIBERALLY AND SINCE IN THE PRESENT CASE ALSO, THE ASSESSEE BY CLAIMING PRO-RATA INCOME ON QUALIFYING UNITS HAS COMPLIED WITH CLAIM OF THE ASSESSEE WAS RIGHTLY ALL OWED BY THE LEARNED CIT(A) BY REVERSING THE ORDER OF THE AO.' 14. SIMILARLY, THE BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF EKTA HOUSING PVT. LTD. IN ITA NO. 3649/MUM/2009 DATED 20-5-2011 PERTAINING TO A. Y. 2004-05 RELIED UPON T HE CALCUTTA BENCH OF THE TRIBUNAL, AS ALSO THE DECISIONS IN THE CASES OF BRIGADE ENTERPRISES PVT. LTD., SHETH DEVELOPERS PVT . LTD. AND OBSERVED THAT DEDUCTION U/S 80-IB(10) OF THE ACT WA S TO BE 4 ALLOWED ON PROPORTIONATE BASIS WITH REFERENCE TO QUAL IFYING RESIDENTIAL UNITS AND THAT THE ASSESSEE WOULD NOT BE DENIED CLAIM FOR DEDUCTION U/S 80-IB(10) OF THE ACT IN ENT IRETY IF SOME OF ITS RESIDENTIAL UNITS WERE OF A BUILT-UP AREA E XCEEDING THE LIMIT PRESCRIBED IN CLAUSE (C) TO SEC. 80-IB( 1 0) OF THE ACT. 15. PERTINENTLY, IT WOULD ALSO BE APPROPRIATE TO NOT ICE THAT THE AFORESAID DECISION OF THE KOLKATA BENCH OF THE T RIBUNAL HAS SINCE BEEN CONFIRMED BY THE HON'BLE CALCUTTA HI GH COURT VIDE ITS ORDER IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. DATED 5-1-2007. THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF D.S. KULKARNI DEVELOPERS LT D. (SUPRA) HAS ALSO UPHELD SIMILAR PROPOSITION FOLLOWING THE A FORESAID PRECEDENTS. 16. FOLLOWING THE AFORESAID PRECEDENTS, WE ARE THER EFORE, OF THE VIEW THAT MERELY THE ASSESSEE HAS VIOLATED THE CONDITION U/S.80-IB(10)(C) OF THE ACT IN RELATION TO 17 FLATS , IT CANNOT BE DENIED THE DEDUCTION U/S 80-IB(10) OF THE ACT ON EN TIRE PROFITS OF THE PROJECT WHICH PERTINENTLY INCLUDE PROFITS IN RELATION TO RESIDENTIAL UNITS WHICH COMPLY WITH THE LIMITS PRESCRIB ED IN SEC. 80-1B(10)(C) OF THE ACT. OF COURSE, THE DEDUCT ION U/S 80- IB(10) OF THE ACT SHALL BE DENIED ON THE PROFITS PROP ORTIONATE TO 17 FLATS WHICH ARE IN VIOLATION OF SEC. 80-IB(10) OF THE ACT. FOR BALANCE OF THE RESIDENTIAL UNITS, THE PLEA OF T HE ASSESSEE FOR DEDUCTION U/S 80-IB(10) OF THE ACT, IN OUR VIEW, IS FAIR AND REASONABLE. WE HOLD SO. 17. IN THE RESULT, WE SET ASIDE THE ORDER OF THE CIT( A) AND DIRECT THE ASSESSING OFFICER TO RE-WORK AND ALLOW T HE DEDUCTION 'U/S. 80-IB(10) OF THE ACT TO THE ASSESSEE Q UA THE PROFITS RELATABLE TO THE RESIDENTIAL UNITS COMPLYING W ITH THE CONDITION PRESCRIBED U/S.80-IB(10)(C) OF THE ACT.' 5.4 AS CAN BE SEEN FROM THE ABOVE EXTRACT FROM THE O RDER OF THE HON. ITAT, THE ISSUE UNDER DISPUTE IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED PARTLY IN FAVOUR OF THE APPELLANT BY A HIGH ER JUDICIAL AUTHORITY BY HOLDING THAT WHILE THE APPELLANT WAS NO T ENTITLED TO FULL DEDUCTION UNDER SECTION 80IB (10), IT WAS ELIGIBLE FO R PARTIAL DEDUCTION IN RESPECT OF THE ELIGIBLE RESIDENTIAL UNIT S OF THE HOUSING PROJECT. THE LEARNED AO HAS ALSO BEEN DIRECTED TO RE WORK THE DEDUCTION UNDER SECTION 80-IB (10) TO THE EXTENT OF THE PROFITS RELATABLE TO THE QUALIFYING RESIDENTIAL UNITS. GROUND NO.1 OF THIS APPEAL IS, THEREFORE, ALLOWED TO THIS EXTENT AND MAY BE TREATED AS PARTLY ALLOWED. THE AO IS DIRECTED TO TAKE ACTION A S DIRECTED BY THE HON. ITAT AND ALLOW PROPORTIONATE DEDUCTION. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD CIT(A) WAS CORRECT IN HOLDING THAT AS THE ASSESSEE HAS VIOLATED THE CONDITION U/S. 80IB(10)(C) OF THE AC T IN RELATION TO MERELY 17 FLATS, IT CANNOT BE DENIED THE DEDUCTION U /S. 80IB(10) OF THE ACT ON ENTIRE PROFITS OF THE PROJECT WHICH, PERT INENTLY, INCLUDE 5 PROFITS IN RELATION TO RESIDENTIAL UNITS WHICH COMPLY WITH THE LIMITS PRESCRIBED IN U/S. 80IB(10(C) OF THE ACT ? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD CIT(A) WAS CORRECT IN ALLOWING PRO PORTIONATE DEDUCTION U/S. 80IB(10) OF THE ACT TO THE PROJECT CO NSISTING OF FLATS HAVING BUILT-UP AREA OF LESS THAN 1500 SQ. FT. AS WELL AS BUILT-UP AREA OF MORE THAN 1500 SQ. FT., ALTHOUGH THE SAME IS IN CONTRAVENTION OF PROVISIONS OF SECTION 80IB(10) ? 3. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 7. AFTER HEARING BOTH THE SIDES, WE FIND NO INFIRMI TY IN THE ORDER OF THE CIT(A). ADMITTEDLY, THE TRIBUNAL HAS DECIDE D THE ISSUE PARTLY IN FAVOUR OF THE ASSESSEE BY HOLDING THAT TH E ASSESSEE IS ENTITLED TO PROPORTIONATE DEDUCTION IN RESPECT OF R ESIDENTIAL UNITS WHICH COMPLY WITH THE CONDITIONS PRESCRIBED U/S.80I B(10)(C) OF THE I.T ACT. NOTHING CONTRARY WAS BROUGHT TO OUR NOTIC E AGAINST THE SAID ORDER OF THE TRIBUNAL. SINCE AFTER THE SEARCH ACTION ALSO THE FACTS REMAIN SAME, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS DIRECTED THE ASSESSING OFFICER TO AL LOW PROPORTIONATE DEDUCTION U/S.80IB(10) BY FOLLOWING T HE DIRECTION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE SAME AS SESSMENT YEAR. THE GROUNDS RAISED BY THE REVENUE ARE THEREFORE DIS MISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05-09-2014. SD/- SD/- (R.S.PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 05 TH SEPTEMBER, 2014 SATISH 6 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) CENTRAL, PUNE 4. THE CIT CENTRAL, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE