Hi-Tech Estates & Promoters (P) Ltd., , Bhubaneswar V. Principal Commissioner of Income Tax-1, Bhubaneswar

ITA 173/CTK/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5983 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 12-08-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 263; 48

Judgement Text

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI ARUN KHODPIA, AM आयकर अपीऱ सं./ITA No.173/CTK/2020 (नििाारण वषा / AY. :2015-2016) Hi-Tech Estates & Promoters Private Limited, Plot No.A/103, Saheed Nagar, Bhubaneswar-751007 Vs Pr.CIT-1, Bhubaneswar PAN No. : AAACH 9591 G (अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent) ननधाारिती की ओर से /Assessee by : Shri B.D.Ojha, A.R. िाजस्व की ओर से /Revenue by : Shri M.K.Gautam, CIT-DR स ु नवाई की तािीख / Date of Hearing : 24/05/2022 घोषणा की तािीख/Date of Pronouncement : 18/08/2022 आदेश / O R D E R Per Arun Khodpia, AM: This is an appeal filed by the assessee against the order passed by the PCIT-1, Bhubaneswar, dated 23.03.2020, u/s.263 of the Act for the A.Y.2015-2016. 2. At the outset, it is found that the appeal of the assessee is barred by 48days. In this regard, ld. AR has filed an application along with affidavit explaining the delay occurred in filing the appeal, to which ld. CIT-DR did not object. Considering the application of the assessee and with the consent of the parties, we condone the delay of 48 days in filing the present appeal and appeal is heard finally. 3. The assessee has raised the following grounds:- 1. Because that the Principal Commissioner of Income Tax-1, Bhubaneswar erred in law as well as in facts by setting aside ITA No.173/CTK/2020 2 the assessment in the matter of allowance of deduction/s 80IB(10) though the issue have been examined by the Ld. Assessing Officer during assessment proceedings as is evident from the order of assessment. 2. That the appellant may add, alter, delete or amend any grounds at the time of hearing of the matter 4. Brief facts of the case are that there the assessee company engaged in real estate business and filed its return of income for the assessment year under consideration electronically on 30.10.2015 with returned income at Rs.1,32,99,940/-. Thereafter the AO completed the assessment accepting the returned income furnished by the assessee. 5. Subsequently, the Pr.CIT invoking his powers u/s.263 of the Act, called for the assessment records and found that the assessment order passed by the AO is erroneous insofar as it is prejudicial to the interest of revenue. Accordingly, the PCIT remitted back the assessment framed by the AO for de novo assessment after proper verification of the issue. 6. Now, the assessee is in appeal before the Tribunal. 7. Ld. AR before us submitted that the Ld Principal Commissioner of income Tax Bhubaneshwar-1 has erred in law as well as facts by setting aside the assessment in the matter of allowance of deduction/s 80IB(10) though the issue have been examined by the Ld. Assessing Officer during assessment proceedings as is evident from the order of assessment. 8. Ld AR further submitted that when the AO has passed an order u/s 143(3) of the Act after due verification of the records and completing ITA No.173/CTK/2020 3 assessment proceedings as per law which is evident from para 2 of the assessment order itself wherein the AO has mentioned that :- 2. In response to the above notice, Shri B.o. Ojha, Chartered Accountant and NR of the assessee appeared from time to time, furnished related documents, and ledger that were asked to explain the case. During the assessment proceedings detailed information with regard to the issues or reasons for scrutiny selection was called for and the same was verified. The assessee was offered reasonable opportunity of being heard. I have carefully gone through the submission of the assessee and satisfied with the explanation offered by the assessee. Hence, the return income furnished by the assessee is accepted. 9. Therefore observation of the Ld PCIT that the AO has not verified the issue is under wrong assumption and deserves to be set-aside. 10. Ld AO further submitted that the assessee has responded with proper submission to the notice issued u/s 263 to Ld PCIT vide its letter dated 12.03.2020 available at page 10 to 12 of its paper book. Ld PCIT has not appreciated the fact that the assessee company has to incur nominal expenses at final finishing stage of flats before registration in favour of the customers which is evident from the amount of expenditure incurred and sales recognized for the year. Hence, such nominal expenses even incurred after the date of completion of the project do not give rise to the opinion that the project was not completed. This also contended that the assessee was allowed deduction on the same project by the Ld AO in assessment proceedings u/s 147/143(3) of the ACT for the earlier AY 2012-13. Therefore the assessee is fairly eligible for the same deduction for AY2015-16 also. ITA No.173/CTK/2020 4 11. On the other hand, ld. CIT-DR has started his argument by showing us for our perusal certain paras of the order of Ld PCIT passed u/s 263, reads as under :- iv. Further on verification of record it was noticed that the revenue from sale was derived from three housing projects. In absence of detailed computation of deduction under chapter VIA, It could not be ascertained from which project, actually deduction was claimed. On scrutiny of the following details it was clear that during the previous year i.e. FY 2014-15. construction work of three projects were not completed and still going on. Name of the project Opening Stock Cost of material & Labour consumed during the year Sale Closing Stock of work in Progress (Note No.2.21 of P&L a/c) Hi-Tech Plaza 56,43,06,263 2,47,87,603 35,82,47,550 29,60,47,370 Kalyani Plaza Annexe 5,87,94,902 47,46,811 7,37,20,202 32,38,587 Hi-Tech Visakhapatnam 4,32,75,596 3,78,24,497 9,03,73,261 71,74,766 v. As per the provision of the Act, any company engaged in developing and building of housing project is eligible to claim 100% of the profit derived from the project as deduction under section 801B( 10) subject to fulfillment of the under mentioned specified conditions- The project should be approved by a local authority before March 31,2008 The size of the plot of land is a minimum of one acre The construction of the project must be completed In a case where the projects approved by a local authority before 01-04-2004, construction must be complete done or before 31-03- 2008, In a case where the housing project is approved after 01-04-2005, the period of completion would be five years from the end of the finance year in which the approval is obtained The built up area of each residential unit should be maximum limit of 1500 sq.ft, for places other than Delhi, Mumbai & within 25 kilometers from the local limit of Delhi and Mumbai. Not more than one unit will be allotted to the same allottee. ITA No.173/CTK/2020 5 6.i. Thus from the above facts it is easy to sum up that for claiming deduction u/s 80IB(10), it was mandatory for approval of the project on or before 31st March 2008 and the period of completion of the project would be five years from the end of the financial year in which the approval was obtained. In the instant case the construction of the project should have been completed at least by 31st March 2013 i.e. FY 2012-13. But from the material on record, as detailed above, three projects from which sale-revenue was recognized were not completed on or before 31st March 2013 and the construction work was found to be I still going on in the F. Y 2014-15 under consideration. 6.ii. In view of the above facts, it could be easily concluded that the above three projects were not eligible for deduction u/s 801B(1 D} and the deduction claimed thereon was required to be added back to the total income which was not done at the time of assessment. 12. Further it is submitted that from page 5 of the Ld PCIT’s order a table showing Date of First Approval from the submissions of the assessee reproduced by the Ld PCIT that, date of “Kalyani Plaza Annex” was 05.12.2009, whereas as per provisions of section 80IB(10) the date of approval of the project should be before 31.03.2008, thus not eligible for deduction U/s 80IB(10). 13. It is further stated by the Ld CIT DR that contention of the assessee which is recorded in para 7.ii of the PCIT’s order that “He pointed out that some of the queries now raised are not as per law i.e. there is no such stipulation in law that project be approved before 31.03.2008 rather if approved after 31.03.2005, then it must be completed within 5 years.” are correctly denied by the Ld PCIT being not admissible under the provisions of the Act. 14. It is also submitted by the LD CIT DR that assessee himself has fairly admitted that no pointed query was raised by the AO on deduction u/s 80IB(10) which the proceedings u/s 263 were conducted the same ITA No.173/CTK/2020 6 fact is duly recorded by Ld PCIT in his order. Ld CITDR also allegedly mentioned that if something is questioned by the AO and submitted by the assessee then why such documents are not submitted by the Ld AR in assessee’s paper book. 15. It is further submitted that Ld PCIT has correctly observed regarding the expenses incurred by the assessee company after the completion of project for which para 8 of the order of Ld PCIT is self explanatory and clear: 8. The above submission of the assessee was perused in conjunction with the details filed In support and the details filed in the Return and during assessment proceedings. It is stated by the AR that in projects like Hi Tech Plaza, the due date of completion was 31.3.2013. But, a perusal of Note 2.21 to the Audited accounts shows that the expenditure on Hi Tech Plaza .is evident from the verifiable details there from. Particulars Closing Stock (Rs) Year ended 31.3.2015 Closing Stock (Rs.) Year ended 31.3.2014 WIP Residential Projects Expenses on Hi Tech Plaza 29,60,47,371 56,43,06,264 As regards the details of Capital WIP of the project Hi Tech Plaza as on 31.3.2015 provided during the assessment proceedings is extracted herein below-. Op Stock Cost of Materials and Labour Sale Cl Stock 56,43,06,264 2,47,87,603 35,82,47,550 29,60,47,371 The AR has stated about the expenses incurred on this project is at Rs. 2,47.87.603/- which as per the AR would be 6.91 % of total sales. What is relevant here is the total project cost (and not the sales made) and the proportion of expenditure incurred up to the specified date. The details are not filed before me to make a verification vis-a vis the expenditure claimed. It is also to note that the verification should be of the expenditure till 31.3.13 and the expenditure incurred after that date i e. during FY 13-14 and 14-15 and so on till completion of the project. Similarly, regarding the other project, a similar exercise is to be done for expenditure till the ITA No.173/CTK/2020 7 specified date ie 31.3.2015 and expenditure after that date to draw a final conclusion in this regard in respect of the ratio of expenditure till the date of specified date as per provision of Sec 801B(1 0) for project completion and the expenditure after that date . Needless to mention, the other necessary conditions should also be subject to verification before drawing any final conclusion on the eligibility of the assessee for the deduction u/s 80IB(10) claimed. 9. Thus, having regards to the facts and circumstances of the case and discussion as above, I am of the conclusion that due verification of the issue was not made (which was also admitted by the AR) by the Assessing Officer despite the case having been selected for verification of such an issue. rendering the assessment order, being erroneous & prejudicial to the interest of revenue. Therefore, I hereby deem it fit and proper to set aside the assessment for due modification after considering the said claim and related issues de novo as per law However, it goes without saying that while doing so the assessee must be given sufficient opportunity to represent his case. 16. According to above observation of Ld PCIT, due verification of the issue raised under limited scrutiny needs to done by the AO has not done hence initiation of proceedings u/s 263 are needs to be uphold. 17. We have heard the rival contentions and pleadings, perused the material available on records and understood the facts of the case. 18. The issues arose from the above discussion for our adjudication are that : (1) Whether a housing project approved after 31.03.2008 is eligible for deduction u/s 80IB(10) ? (2) Whether expenses incurred after the date of completion of project will construed that the project was not completed on the said date? 19. To decide on Question no 1, we are reproducing here with provision of section 80IB(10) which reads as under:- 80IB(1) “The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31 st day March 2008 by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if.-” ITA No.173/CTK/2020 8 20. From the plan reading of the above provision, it is very clear that projects approved after 31.03.2008 are not eligible for deduction u/s 80IB(10), hence answer to this question goes against the assessee for project “Kalyan Plaza Annex”. Contention of the assessee that, there is no such stipulation in law that project be approved before 31.03.2008 rather if approved after 31.03.2005, then it must be completed within 5 years is not tenable, thus rejected. 21. Regarding 2 nd Question for expenditure after completion of project, contention of the assessee may be correct to some extent but the nature of expenses and volume would be key factor to be verified and examined. Therefore contention of Ld PCIT to have the same re-verified is acceptable. 22. On the basis of our considered opinion on these two issues the proceedings initiated u/s 263 and order passed by Ld PCIT are justifiable being the order of AO was erroneous & prejudicial to the interest of revenue, therefore the same is uphold and needs no interference. 23. In the result, appeal of the assessee is dismissed. Order pronounced u/R.34(4) of ITAT Rules, 1963 on 18/ 08/ 2022. Sd/- (C.M.GARG) Sd/- (ARUN KHODPIA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 18/08/2022 Prakash Kumar Mishra, Sr.P.S. ITA No.173/CTK/2020 9 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack 1. अऩीलाथी / The Appellant- Hi-Tech Estates & Promoters Private Limited, Plot No.A/103, Saheed Nagar, Bhubaneswar-751007 2. प्रत्यथी / The Respondent- Pr.CIT-1, Bhubaneswar 3. आयकि आय ु क्त(अऩील) / The CIT(A), 4. आयकि आय ु क्त / CIT 5. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, Cuttack 6. गार्ा पाईल / Guard file. सत्यावऩत प्रनत //True Copy//