ITO 25(2)(3), MUMBAI V. SHIVAM ENTERPRISES, MUMBAI

ITA 175/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3412 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBEY
• Assessee Lawyers: NEELAM C JADHAV; D K SHIVARAM
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI RAJENDRA, AM AND SHRI SANDEEP GOSAIN, J M ./ I.T.A. NO. 175/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) I.T.O. 25(2)(3), ROOM NO.105, C-11, PRATYAKSHA KAR BHAWAN, B.K.C. BANDRA, MUMBAI-400 051. / VS. M/S. SHIVAM ENTERPRISES 604, VASANT VANDAN, SAIBABA NAGAR, BORIVALI (W), MUMBAI-400 092. ./ ./PAN/GIR NO. ABAFS 8548J ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SACHIDANAND DUBEY / RESPONDENT BY : SHRI D.K. SHIVARAM & MS. NEELAM C. JADHAV / DATE OF HEARING : 19/11/2015 !'# / DATE OF PRONOUNCEMENT : 23/03/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 35, DATED 11. 10.2012 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS OF APPEAL. 2 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S. 80IB( 10) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE FIRST COMMENCEMENT C ERTIFICATE WAS ISSUED TO THE ASSSESSEE ON 06/09/1991 I.E. PRIOR TO 1 ST OCTOBER 1998 AS PER EXPLANATION (I) OF SECTION 80IB(L0).' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN OBSERVING THAT THE CONSTRUCTION WAS NOT CO MMENCED TILL 03.L 0.2005, WITHOUT BRINGING ANY CONCRETE EVIDENCE ON RECORD AB OUT ACTUAL DATE OF COMMENCEMENT OF PROJECT.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN OBSERVING THAT THE CONSTRUCTION WAS COMPLE TED BEFORE 31.03.2008, WITHOUT GIVING ANY CONCRETE DOCUMENTARY EVIDENCE OR FACT FINDINGS PROVING THAT THE CONSTRUCTION WAS COMPLETED ON 31103/2008.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT ASSESSEE IN SUPPORT OF CO MPLETION OF PROJECT FURNISHED PARTIAL COMPLETION CERTIFICATE ISSUED BY THE LOCAL AUTHORITIES, AND THEREBY PROVED THAT THE PROJECT WAS NOT COMPLETED BEFORE 01 /04/2008. ' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(A) HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THA T THE PROJECT WAS NOT COMMENCED TILL 0311 0/2005. ADDITIONALLY, ASSESSEE ALSO NEVER PUT ON RECORD ANY DOCUMENTARY EVIDENCE ESPECIALLY COMMENCEMENT CE RTIFICATE EVIDENCING THAT THE PROJECT COMMENCED ON 0310/2005 I.E. AFTER 0111011998 EITHER BEFORE THE A.O. OR DURING THE APPELLATE PROCEEDINGS.' 6. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(A) IGNORED THE ORDER ISSUED BY THE HON'BLE MINISTER OF STATE, CITY DEVELOPMENT DEPT., MAHARASHTRA GOVERNMENT BEARING BO. TPS 1998/ 613/P. NO. 1561NV12 08/09/1999 WHICH SOWS THAT THE PROJECT STARED BEFOR E 01/10/1998.' 7. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT( A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED.' 8. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY G ROUND OR ADD A NEW GROUND.' 3 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES 2. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF I NCOME WAS FILED ON 16.07.2009 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING DE DUCTION U/S 80IB(10) AMOUNTING TO RS.37,71,909/- BEING INCOME DERIVED FROM ONGOING CONSTRUCTION OF HOUSING PROJECT. THE RETURN WAS PROCESSED U/S 143(1) AND TH E CASE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY AFTER SERVING STATUTORY NOTIC ES AND CONSIDERING REPLY, THE AO PASSED ORDER OF ASSESSMENT THEREBY DENYING DEDUCTIO N U/S 80IB (10) VIDE ORDER DATED 23.12.2011. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED APPEAL BEFORE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF THE ASSESS EE ALLOWED THE APPEAL VIDE ITS ORDER DATED 11.10.12. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HA S FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. GROUND NO. 1 TO 6: SINCE ALL THE GROUNDS RAISED BY THE REVENUE ARE IN TER-CONNECTED AND INTER- RELATED THEREFORE, WE THOUGHT IT FIT TO DISPOSE OFF THE SAME THROUGH THE PRESENT CONSOLIDATED ORDER. 4 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES 5. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE HAVE NOTICED THAT THE CIT(A) HAD DE CIDED THE ABOVE GROUNDS AND THE OPERATIVE PARA OF CIT(A) IS REPRODUCED HEREIN B ELOW: I HAVE CONSIDERED THE SUBMISSION OF THE REPRESENTA TIVE AND THE STAND TAKEN BY THE AO. THE ONLY ISSUE INVOLVED IN THIS AP PEAL IS THE DATE OF COMMENCEMENT OF HOUSING PROJECT. THE AO HELD THAT T HE APPELLANT OBTAINED THE ORIGINAL COMMENCEMENT CERTIFICATE DATE D 06.19.1991 WHICH FALLS 01.10.1998 AND, THEREAFTER, NOT ENTITLED TO D EDUCTION U/S AS ONE OF THE CONDITION LAID DOWN IN SECTION 80IB(10) IS THAT THE HOUSING PROJECT SHOULD HAVE BEEN COMMENCED ON OR AFTER 01.10.1998. FROM AN ANALYTICAL READING OF THE PROVISIONS OF SEC .80IB(10. IT CAN BE SEEN THAT AN UNDERTAKING SHOULD HAVE COMMENCED OR C OMMENCES DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT ON OR AFTER 01.10.1998 AND COMPLETED SUCH CONSTRUCTION BEFORE 31.03.2008 I N CASE WHERE THE HOUSING PROJECT HAS BEEN APPROVED BY THE LOCAL AUTH ORITY BEFORE 01.04.2004. AS PER EXPLANATION, THE DATE OF THE FIRST APPROVAL BY THE LOCAL AUTHORITY SHALL BE TAKEN TO HAVE BEEN APPROVED ON THAT DATE W HICH MEANS THAT FOR THE PURPOSE OF DETERMINING THE COMPLETION OF CONSTR UCTION, THIS CRITERIA HAS TO BE APPLIED. THERE IS NO DEEMING PROVISION FO R DETERMINING THE COMMENCEMENT OF DEVELOPMENT OR CONSTRUCTION. THE SE CTION NOWHERE 5 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES MENTIONED THAT THE DATE OF FIRST APPROVAL SHALL BE TAKEN AS THE COMMENCEMENT OF THE PROJECT. THE EXPLANATION (1) HAS TO BE READ WITH CLAUSE A(I) WHICH PRESCRIBE THE TIME LIMIT FOR COMPLETION OF THE PROJECT. IN THE CA SE OF THE APPELLANT, EVEN THOUGH THE ORIGINAL APPROVAL WAD DATED 06.09.1991 F OR THE ENTIRE AREA, THE APPELLANT SUBSEQUENTLY OBTAINED REVALIDATION BY THE ORDER DATED 03.10.2005 WHICH ESTABLISH THE FACT THAT THE RELEVA NT HOUSING PROJECT WAS NOT COMMENCED TILL 03.10.2005 AND EVEN ASSUMING THA T THE PROJECT WAS APPROVED BEFORE 01.04.2004 THE APPELLANT HAS TO COM PLETE THE CONSTRUCTION BEFORE 31.03.2008 WHICH IN ANY CASE IS FULFILLED. A PLAIN READING OF SECTION 80IB (10) SHOWS THAT SO FAR AS THE APPROVAL OF HOUSING PROJECT IS CONCERNED, THE SECTION ONLY SPEC IFIES THAT IT SHOULD HAVE BEEN APPROVED BEFORE THE SPECIFIC DATE AND THE RE IS NO STIPULATION IN THE SECTION THAT THE PROJECT SHOULD HAVE BEEN AP PROVED AFTER A CERTAIN DATE. THE CONDITION LAID DOWN IN THE SECTION IS THA T THE PROJECT SHOULD BE COMMENCED ON OR AFTER 01.10.1998 AND THERE IS LOT O F DIFFERENCE BETWEEN THE DATE OF APPROVAL OF THE HOUSING PROJECT AND THE DATE OF COMMENCEMENT OF THE PROJECT AND THE AO MISTOOK THE DATE OF APPROVAL OF THE HOUSING PROJECT AS THE DATE OF COMMENCEMENT WHI CH IS NOT CORRECT. IN THE CIRCUMSTANCES, WHEN THE ISSUE WAS ALSO DECID ED BY MY PREDECESSOR IN FAVOUR OF APPELLANT IN A.Y.2007-08 V IDE APPEAL ORDER DT. 27.01.2010. I FIND THAT THE A.O. WRONGLY APPLIED EX PLANATION. I WITH REFERENCE TO THE COMMENCEMENT OF PROJECT WHEREAS IF IS APPLICABLE WITH REFERENCE TO THE COMPLETION OF CONSTRUCTION. IN VIE W OF THE ABOVE, I HOLD 6 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES THAT THERE IS NO JUSTIFICATION FOR DENYING DEDUCTIO N U/S. 80IB (10) AND THE A.O. IS DIRECTED TO ALLOW THE SAME. 6. IN THE RESULT THE APPEAL IS ALLOWED. 6. OUR ATTENTION WAS ALSO DRAWN TOWARDS PAPER BOOK WHICH CONTAINS ORDER OF CIT(A) FOR A.Y. 2007-08 DATED 29.03.2010 AND FOR A. Y. 2008-09 DATED 29.01.2015 AT PAGE NO. 80 TO 85, FROM THE READING OF THE SAME WE FOUND THAT THE CIT(A) HAD ALLOWED THE APPEAL FILED BY THE ASSESSEE FOR THE SA ID YEAR AND DIRECTED THE AO TO ALLOW THE DEDUCTION U/S 80IB(10) OF THE INCOME TAX ACT. OUR ATTENTION HAS ALSO BEEN DRAWN TOWARDS ORDER PASSED BY ITAT IN ITA NO. 4765/MUM/2010 A.Y. 2007-08 WHICH WAS DECIDED ON 25.03.2015 IT IS IMPOR TANT TO MENTION HERE THAT WHEN THE IMPUGNED ORDER DATED 11.10.2012 WAS PASSED BY CIT(A), BY THAT TIME THIS ORDER OF ITAT WAS NOT AVAILABLE. THEREFORE, IN THESE CIRCUMSTANCES WE HAVE ANALYSED THE ORDER PASSED BY ITAT IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AND OPERATIVE PARA OF ITAT ARE REPRODUCED BELOW: THEREFORE THE COMMENCEMENT OF THE PROJECT HAS TO B E TAKEN INTO ACCOUNT AS PER THE ACTUAL CONSTRUCTION WORK STARTED IN RESPECT OF THE PROJECT AND NOT BY TAKING INTO CONSIDERATION THE OR IGINAL SANCTION AND AMENDED SANCTION OF THE PLAN. SINCE THE ACTUAL WORK OF CONSTRUCTION AND DEVELOPMENT OF THE PROJECT HAS NOT BEEN EXAMINE D BY THE AUTHORITIES BELOW, THEREFORE, IN FACTS AND CIRCUMST ANCES OF THE CASE, 7 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES WE SET ASIDE THIS ISSUE TO THE RECORD OF AO FOR PRO PER VERIFICATION AND EXAMINATION OF THE FACT AND THEN DECIDE THE ISSUE A S PER LAW. THE ISSUE OF COMPLETION OF PROJECT WITHIN THE PRESCRIBED TIME LIMIT IS KEPT OPEN. 7. AFTER CONSIDERING THE AFORE MENTIONED ORDER PASS ED BY ITAT, WE ARE IN AGREEMENT WITH THE SAME AND THEREFORE WHILE MAINTAI NING THE JUDICIAL CONSISTENCY AND RESPECTFULLY FOLLOWING THE SAME, AND AFTER CONS IDERING THAT THE ISSUE IN PRESENT CASE IS ALSO SAME AS WAS RAISED BEFORE THE HONBLE ITAT . THEREFORE, WHILE FOLLOWING THE ORDERS OF ITAT WE ALSO SET ASIDE THIS ISSUE TO THE RECORD OF THE AO FOR PROPER VERIFICATION AND EXAMINATION OF THE FACT AND THEN TO DECIDE THE ISSUE AS PER LAW. THE ISSUE OF COMPLETION OF PROJECT WITHIN THE PRESCRIBED TIME LIMIT IS KEPT OPEN. 8. GROUND NO. 7&8 ARE GENERAL IN NATURE AND NEEDS N O SEPARATE ADJUDICATION IN VIEW OF THE ABOVE DECISION. 9. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. 8 ITA NO. 175/MUM/2013 (A.Y. 2009-10) ITO VS. M/S. SHIVAM ENTERPRISES ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2016 SD/- SD/- (RAJENDRA) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED: 23.03.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI