Income-tax Officer, V. Brahma Associates, Pune

ITA 1757/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2560 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 22-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1757/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ITO, WARD-4(5), PUNE . / APPELLANT V/S BRAHMA ASSOCIATES, C/O. RESIDENCY CLUB, 3, QUEENS GARDEN ROAD, PUNE 411 001 PAN NO. AAAJB0412B . / RESPONDENT / ASSESSEE BY : SHRI KISHOR PHADKE / REVENUE BY : SHRI ACHAL SHARMA / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28-05-2014 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N AOP AND FILED ITS RETURN OF INCOME ON 19-09-2010 DECLARING TOTA L INCOME OF RS.98,71,097/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND A PROJECT NAMED BRAHMA ES TATE / DATE OF HEARING :07.03.2016 / DATE OF PRONOUNCEMENT: 09.03.2016 2 ITA NO.1757/PN/2014 WAS FLOATED AT KONDHWA, KHURD, PUNE DURING THE F.Y. 2000-0 1. THE ASSESSEE CLAIMED THE SAID PROJECT TO BE AN ELIGIBLE PR OJECT U/S.80IB(10) OF THE I.T. ACT. THE COMMENCEMENT CERTIFICATE FOR THE SAID PROJECT WAS OBTAINED FROM THE LOCAL AUTHORITY ON 06-10- 2010. THE ASSESSEE DECLARED PROFITS FROM THE PROJECT FOR THE FIRST TIME IN A.Y.2003-04 AND CLAIMED DEDUCTION U/S.80IB(10) OF THE I.T. ACT ON THE ENTIRE PROJECT. THE AO NOTED THAT THE ASSESSMENT U/S.143(3) OF THE I.T. ACT FOR THE A.Y. 2003-04 WAS COMPLETED ON 27-03-2006 DENYING THE DEDUCTION U/S.80IB( 10) OF THE ACT ON THE GROUND THAT THE PROJECT WAS NOT CO MPLETED AS ON 31-03-2006 AND THE PROJECT WAS A COMMERCIAL PROJEC T HAVING COMMERCIAL BUILT UP AREA OF MORE THAN 20% OF THE TOTAL BUILT UP AREA WHICH EXCEEDS THE LIMIT OF COMMERCIAL BUILT UP AREA BROUGHT IN BY AN AMENDMENT TO SECTION 80IB(10) OF THE AC T. HE NOTED THAT THE ASSESSMENT TRAVELLED THROUGH APPELLATE S TAGES AND THE ASSESSEE HAS BEEN ALLOWED RELIEF. THE HONBLE BOM BAY HIGH COURT WAS ALSO PLEASED TO HELD THAT THE ASSESSEE W AS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE I.T. ACT THOUGH IT WAS NOT AN EXCLUSIVE HOUSING PROJECT. THE AO FURTHER NOTED THAT THE HONBLE HIGH COURT WAS PLEASED TO ORDER THAT THE LIMIT ON THE COMMERCIAL BUILT UP AREA BROUGHT IN BY AN AMENDMENT TO SECTION 80IB(10) OF THE ACT CANNOT BE HELD TO HAVE RETRO SPECTIVE EFFECT. THE AO CONFRONTED THE ASSESSEE REGARDING THE ALLOWABILITY OF THE CLAIM. IT WAS CONTENDED BY THE ASSESSEE THAT IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT THAT THE PROJECT BRAHMA ESTATE IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE I .T. ACT FROM THE FIRST YEAR OF CLAIM, I.E. FROM A.Y. 2003-04, THE CL AIM OF DEDUCTION U/S.80IB(10) OF THE I.T. ACT IS JUSTIFIED SINCE T HE 3 ITA NO.1757/PN/2014 PROJECT IS THE SAME. VARIOUS DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE AO. 3. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT ALTHOUGH THE JUR ISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E, HOWEVER, THE REVENUE HAS PREFERRED FURTHER APPEAL BEFORE THE HONBLE APEX COURT BY WAY OF SPECIAL LEAVE PETITION. ACCO RDING TO THE AO, AS PER THE PROVISIONS OF SECTION 80IB(10) OF T HE ACT, THE ASSESSEE FOR GETTING THE BENEFIT HAS TO FULFIL THE FOLLOWING CONDITIONS : A) HOUSING PROJECT HAS TO BE APPROVED BY LOCAL AUTHORITY . B) PROJECT TO BE COMPLETED BEFORE 31-03-2003. C) PROJECT TO COMMENCE ON OR BEFORE 01-10-1998 D) SIZE OF THE PLOT OF THE LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. E) RESIDENTIAL UNIT IN CITIES OTHER THAN DELHI OR MUMBAI SHOULD HAVE MAXIMUM BUILT UP AREA OF 1,500 SQ.FT. 4. HOWEVER, SINCE THE PROJECT BRAHMA ESTATE WAS NOT COMPLETED BEFORE 31-03-2003 AND SINCE THE COMMERCIAL BUILT UP AREA OF THE PROJECT BRAHMA ESTATE IS 7128.87 SQ.MTR B EING MORE THAN 20% OF THE TOTAL BUILT UP AREA AND SINCE THE IN COME THAT HAS ACCRUED DURING THE FINANCIAL YEAR RELEVANT TO A.Y . 2010-11 HAS EXCLUSIVELY DERIVED BY THE SALE OF 8 COMMERC IAL UNITS ADMEASURING 5217.57 SQ.FT. AND ONE RESIDENTIAL UNIT ADMEASURING 1370 SQ.FT. THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IB(10) OF THE I.T. ACT. 4 ITA NO.1757/PN/2014 5. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04, 2004-0 5, 2005-06 AND 2006-07 ALLOWED THE CLAIM OF THE ASSESSEE. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN HOLDING THE ASSESSEE AS ELIGIBLE FOR DEDUCTION U/S. 80 1 B(1 0) WHEN THE ASSESSEE'S PROJECT HAD BEEN APPROVED AS A 'RESIDE NTIAL- CUM-COMMERCIAL PROJECT' AND NOT AS A 'HOUSING PROJECT ' PER SE; AND ALSO WHEN MORE THAN 20% OF THE ENTIRE AREA OF THE PR OJECT WAS COVERED BY SHOPPING COMPLEX? 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT THE DEDUCTION UNDER SECTION 80IB(10) AS APPLICABLE PRIOR TO 1 ST APRIL, 2005 IS ADMISSIBLE IN THE CASE OF A 'HOUSING PROJECT' COMPRISING RESIDENTIAL HOUSING UNIT AND COMME RCIAL ESTABLISHMENTS? 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FAILING TO APPRECIATE THE LETTER AND SPIRIT OF SEC TION 80IB(10) PRIOR TO ITS SUBSTITUTION BY THE FINANCE (NO.2) ACT, 2 004 W.E.F. 01.04.2005 WHICH HAD AVOWEDLY BEEN BROUGHT INTO THE STATUE TO PROMOTE HOUSING AS A PRIORITY AREA AND WHICH (THE UN- AMENDED SECTION) NEITHER CONTEMPLATE, NOR PROVIDE FOR, ANY C OMMERCIAL SPACE OR AREA WHATSOEVER AS CONSTITUTING A PART OF A 'H OUSING PROJECT' ? 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT THOUGH THE AMENDED PROVISION OF SECTI ON 80IB(10)(D) CAME INTO OPERATION W.E.F 01.04.2005, T HOSE WERE NOT APPLICABLE IN THE CASE OF ASSESSEE RELATING TO AY. 2010- 11 WITHOUT APPRECIATING AND APPLYING THE PRINCIPLE LAID DOWN B Y HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ISTHMIAN STEAMSHIP LINE, 20 ITR 52 AND KARIMATHARUVI TEA ESTATE LTD., 60 ITR 262 ? 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT THE AMENDED PROVISIONS U/S. 80IB(10)(D ) WOULD NOT BE APPLICABLE W.E.F. 01.04.2005 AS THE COMMENCEM ENT CERTIFICATE WAS DATED 06.1 0.2000? 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN COMING TO THE ABOVE CONCLUSION ON THE INCORRECT P REMISE THAT ESTOPPELS CAN BE INVOKED AGAINST THE GOVERNMENT IN EX ERCISE OF ITS LEGISLATIVE POWERS? 5 ITA NO.1757/PN/2014 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A COPY OF THE ORDER OF THE JURISDICTIONAL HIGH COURT IN ASSESSEE S OWN CASE, I.E. BRAHMA ASSOCIATES VS. CIT REPORTED IN 333 ITR 2 89 AND SUBMITTED THAT FOR A.Y. 2003-04 THE REVENUE HAS CHALLENGED THE ORDER OF THE TRIBUNAL AND THE HONBLE HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE REVENUE. THE ASSESSEE H AS DERIVED PROFIT FROM THE SAME PROJECT FOR THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80IB(10) OF THE I.T. ACT. SINCE THE MATTER HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE JURISDICTION AL HIGH COURT IN ASSESSEES OWN CASE, THEREFORE, THE GROUNDS R AISED BY THE REVENUE HAS TO BE DISMISSED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED T HAT THE ISSUE STANDS DECIDED AGAINST THE REVENUE BY THE DE CISION OF THE JURISDICTIONAL HIGH COURT. HOWEVER, THE DEPARTMENT HA S NOT ACCEPTED THE DECISION AND SLP HAS FILED BY THE REVENUE B EFORE THE HONBLE APEX COURT. HE ACCORDINGLY SUBMITTED THAT THE HONBLE TRIBUNAL MAY TAKE APPROPRIATE DECISION. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND ON APPEAL FILE D BY THE REVENUE AGAINST THE ORDER OF THE TRIBUNAL THE FOLLOWIN G QUESTIONS OF LAW WERE ADMITTED FOR A.Y. 2003-04 IN ASSESSEE S OWN CASE : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS JU STIFIED IN HOLDING THAT THE DEDUCTION U/S.80IB(10), AS APPLICAB LE PRIOR TO APRIL 1, 2005 IS ADMISSIBLE TO A HOUSING PROJECT COM PRISING OF RESIDENTIAL HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS ? 6 ITA NO.1757/PN/2014 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS JU STIFIED IN HOLDING THAT A PROJECT HAVING COMMERCIAL AREA UP TO 10 PER CENT OF THE PROJECT IS ELIGIBLE FOR DEDUCTION ON THE ENTIRE PROFITS OF THE PROJECT U/S.80IB(10) UP TO APRIL 1 2005? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS JU STIFIED IN HOLDING THAT THE PROJECTS WHEREIN THE COMMERCIAL ARE A IS MORE THAN 10 PER CENT OF THE PROJECT AND THE PROFITS FROM THE RESIDENTIAL DWELLING UNITS IN THAT PROJECT CAN BE WORKED OUT SEPA RATELY THEN, SUBJECT TO FULFILLING OTHER CONDITIONS, DEDUCTION ON THE PROFITS RELATABLE TO THE RESIDENTIAL PART OF THE PROJECT WOU LD BE ELIGIBLE FOR DEDUCTION U/S.80IB(10)? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE INCOME-TAX APPELLATE TRIBUNAL WAS JU STIFIED IN HOLDING THAT THE LIMIT ON COMMERCIAL USE OF THE BUIL T UP AREA AS PRESCRIBED BY CLAUSE (D) OF SECTION 80IB(10) HAS NOT RE TROSPECTIVE APPLICATION AND IT APPLIES ONLY WITH EFFECT FROM THE ASSESSMENT YEAR 2005-06? 10. WE FIND AFTER CONSIDERING VARIOUS DECISIONS THE HONB LE HIGH COURT IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE AGAINST THE REVENUE. IT WAS HELD THAT CLAUSE (D) INSERTED TO SEC TION 80IB(10) WITH EFFECT FROM APRIL 1, 2005, IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE COULD NOT BE APPLIED FOR THE PERIOD PRIOR TO APRIL 1, 2005. SINCE DEDUCTION U/S.80IB(10) WERE ON THE PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY TH E LOCAL AUTHORITY AS A WHOLE, THE TRIBUNAL WAS NOT JUSTIFIED IN RESTRICTING THE SECTION 80IB(10) DEDUCTION ONLY TO A PAR T OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSES SEE HAD ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80IB(10) DEDUCTION TO A PART OF THE PROJECT, THE FINDINGS O F THE TRIBUNAL IN THAT BEHALF COULD NOT BE DISTURBED. 11. SINCE THE AO FOLLOWING THE ORDER FOR PRECEDING ASSESS MENT YEARS HAS DENIED THE CLAIM OF DEDUCTION U/S.80IB(10) AND S INCE THE CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN 7 ITA NO.1757/PN/2014 CASE FOR THE PRECEDING ASSESSMENT YEARS HAVE ALLOWED TH E CLAIM OF DEDUCTION U/S.80IB(10) AND SINCE THE JURISDICTIONAL HIGH COURT HAS ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E IN ASSESSEES OWN CASE FOR A.Y. 2003-04, THEREFORE, IN ABSENC E OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE THE ORDER OF THE CIT(A) HAS TO BE UPHELD. MERELY BECAUSE THE REVENUE HA S FILED AN SLP BEFORE THE HONBLE APEX COURT, THE SAME CANNOT BE A BASIS TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY T HE JURISDICTIONAL HIGH COURT IN ABSENCE OF ANY CONTRARY MATE RIAL. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-03-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 09 TH MARCH, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - II, PUNE 4. 5. 6. THE CIT-II, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // TRUE COPY // // $ ' //TRUE C /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE