ITO 15(2)(2), MUMBAI V. VINAMRA BUILDERS, MUMBAI

ITA 1907/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59781 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F,MUMBAI BEFORE SHRI D. MANMOHAN (VICE PRESIDENT) & SHRI T. R. SOOD (AM) I.T.A. NO.1907/MUM/2010 (A.Y. 2006-07) INCOME-TAX OFFICER-15(2)(2), MATRU MANDIR, R.NO.110, TARDEO, MUMBAI-400 008. VS. M/S. VINAMRA BUILDERS, GR. FLOOR, SHAILESH BLDG. OUT HOUSE, SANTACRUZ (W), MUMBAI-400 054. PAN: AAAAV2211P APPELLANT RESPONDENT APPELLANT BY SHRI SHANTAM BOSE. RESPONDENT BY SHRI S HASHI TULSIYAN. DATE OF HEARING 12-01-2012 DATE OF PRONOUNCEMENT 20 -01-2012 O R D E R PER T.R. SOOD, AM : IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWIN G GROUND : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS EN TITLED TO DEDUCTION U/S.80IB(10) OF RS.7,68,52,511/- IGNORING THE FACTS THAT THE ITAT SPECIAL BENCH PUNE (2009) 30 SOT 155 IN THE CASE OF M/S. BR AHMA ASSOCIATES HAS CATEGORICALLY HELD THAT THE PROVISIONS OF CLAUSE (D ) OF SECTION 80IB(10), INSERTED BY FINANCE ACT 2004, W.E.F. 1.4.2005 HAS N O RETROSPECTIVE EFFECT AND APPLIES ONLY W.E.F. 1-4-2005 RELEVANT TO A.Y. 2 005-06 AND ONWARDS WHICH HAS BINDING EFFECT IN THIS CASE. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E DEDUCTION U/S.80IB(10), WHICH WAS CLAIMED BY THE ASSESSEE, WAS DENIED BY THE AO BECAU SE THE ASSESSEE HAD CONSTRUCTED MORE COMMERCIAL AREA THAN PERMITTED UNDER CLAUSE (D) OF SEC. 80IB(10). ITA NO.1907/M/2010 M/S.VINAMRA BUILDERS 2 3. ON APPEAL, THE LD. CIT(A) ALLOWED THE DEDUCTION BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE CASE OF M/S. PNK CORPORATION IN APPEAL NO.CI T(A)-XV/IT-5/ACIT15(3)/2008-09 DATED 25- 07-2008 AS WELL AS THE DECISION OF SPECIAL BENCH O F THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES VS. JCIT (119 ITD 255). 4. BEFORE US, THE LD. D.R. RELIED ON HE GROUND OF A PPEAL AND SUPPORTED THE ORDER OF AO. 5. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. BRAHMA ASSOCIATES (333 ITR 289) AS WELL AS THE DECISIONS OF TRIBUNAL IN THE C ASES OF ITO VS. POONAM CONSTRUCTION & POONAM GRUH NIRMAN (ITA NOS.2003 & 2052/MUM/2010 VIDE ORD ER DATED 11-02-2011) AND M/S. HARSH CONSTRUCTION (ITA NO.2216/MUM/2000 VIDE ORDER DATED 30-06-2011). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES (333 ITR 289) , WHILE REVERSING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL, OBSERVED AS UNDER : HELD THAT CLAUSE (D) INSERTED IN SECTION 80IB(10) WITH EFFECT FROM APRIL 1, 2005, IS PROSPECTIVE AND NOT RETROSPECTIVE AND H ENCE COULD NOT BE APPLIED FOR THE PERIOD PRIOR TO APRIL 1, 2005. SINC E DEDUCTION UNDER SECTION 80IB(10) WERE ON THE PROFITS DERIVED FROM T HE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE, THE TRI BUNAL WAS NOT JUSTIFIED IN RESTRICTING THE SECTION 80IB(10) DEDUCTION ONLY TO A PART OF THE PROJECT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE HA D ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING SECTION 80IB(1 0) DEDUCTION TO A PART OF THE PROJECT, THE FINDINGS OF THE TRIBUNAL IN THA T BEHALF COULD NOT BE DISTURBED. FURTHER, WE FIND THAT IN THE CASE OF ITO VS. POONAM CONSTRUCTIONS (SUPRA) THE TRIBUNAL HAD, VIDE PARA 7.2 (PAGES 7 TO 10), OBSERVED AS UNDER : 7.2 WE FIND THE TRIBUNAL, IN THE ABOVEMENTIONED DEC ISION HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) AND AT PARAS 24 TO 27 HAVE HELD AS UNDER: 24. NOW WE WILL DEAL WITH MAIN ISSUE IN THIS APPEAL , I.E., WHETHER THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ITA NO.1907/M/2010 M/S.VINAMRA BUILDERS 3 ACCORDED ON 17TH NOV., 2003 AND WHEN THE ASSESSEE C OMMENCED DEVELOPMENT IS TO BE APPLIED OR THE LAW AS AMENDED BY THE FINANCE ACT, 2005 W.E.F. 1ST APRIL, 2005 WHEREBY IT WAS LAID DOWN THAT THE BUILT-UP ARE A OF THE SHOPS AND COMMERCIAL ESTABLISHMENT INCLUDED IN THE HOUSING PR OJECT SHOULD NOT BE MORE THAN5 PER CENT OF THE TOTAL BUILT-UP ARE OF THE PRO JECT OR 2,000 SQ. FT. WHICHEVER IS LESS IS TO BE APPLIED ? ON THE ABOVE ISSUE, WE HAVE ALREADY NOTICED THAT CO- ORDINATE BENCHES OF TRIBUNAL HAVE ALREADY EXPRESSED OPINION. THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) IS DIRECTL Y ON THE ISSUE. JUDICIAL DISCIPLINE DEMANDS THAT WE SHOULD FOLLOW DECISION OF A CO-ORDI NATE BENCH ON IDENTICAL FACTS. 25. THE PROVISIONS OF S. 80-IB(10) AS IT STOOD AT D IFFERENT PERIODS HAVE ALREADY BEEN GIVEN BY US. AN ANALYSIS OF THE SAME SHOWS THE FOLLOWING CONDITIONS WERE REQUIRED TO BE SATISFIED AT VARIOUS POINT OF TIME : ASST. YR. CONDITIONS 2000-01 (A) HOUSING PROJECT TO BE APPROVED BY LO CAL AUTHORITY (B) PROJECT TO COMMENCE ON OR AFTER 1-10-1998 (C) PROJECT WAS TO BE COMPLETED BEFORE 31-3-2001 (D) SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. 2001-02 (A) HOUSING PROJECT TO BE APPROVED BY LO CAL AUTHORITY (B) PROJECT TO COMMENCE ON OR AFTE R 1-10-1998 (C) PROJECT WAS TO BE COMPLETED BE FORE 31-3-2001 (D) SIZE OF THE PLOT OF LAND FOR T HE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. (E) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE K ILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND A ND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. 2002-03 (A) HOUSING PROJECT TO BE APPROVED BY LO CAL AUTHORITY (B) PROJECT TO BE APPROVED BY LOCAL AUTHORITY BEFOR E 31-3-2001 (C) PROJECT WAS TO COMMENCE ON OR AFTER 1-10-1998 (D) SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. (E) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FR OM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HU NDRED SQUARE FEET AT ANY OTHER PLACE. 2003-04 & 2004-05 (A) HOUSING PROJECT TO BE APPROVED BY LO CAL AUTHORITY (B) PROJECT TO BE APPROVED BY LOCAL AUTHORI TY BEFORE 31-3- 2005 (C) PROJECT WAS TO COMMENCE ON OR AFTER 1-10-1998 (D) SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. (E) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE K ILOMETRES FROM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND A ND FIVE HUNDRED SQUARE FEET AT ANY OTHER PLACE. ITA NO.1907/M/2010 M/S.VINAMRA BUILDERS 4 2005-06 (A) HOUSING PROJECT TO BE APPROVED BY LOC AL AUTHORITY (B) PROJECT TO BE APPROVED BEFORE 31-3-2007 (C) PROJECT WAS TO COMMENCE ON OR AFTER 1-10-1998 (D) THE PROJECT WAS TO BE COMPLETED BEFORE 31-3-200 8, IF THE APPROVAL WAS GIVEN BY A LOCAL AUTHORITY BEFORE 1-4-2004 AND WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE APP ROVAL CAME WHERE THE APPROVAL WAS GIVEN ON OR AFTER 1-4-2004. (E) SIZE OF THE PLOT OF LAND FOR THE PROJECT SHOULD HAVE A MINIMUM OF 1 ACRE. (F) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT-UP ARE A OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY-FIVE KILOMETRES FR OM THE MUNICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HU NDRED SQUARE FEET AT ANY OTHER PLACE. (G) THE BUILT-UP AREA OF THE SHOPS AND COMMERCIAL E STABLISHMENT INCLUDED IN THE HOUSING PROJECT SHOULD NOT BE MORE THAN 5% OF THE TOTAL BUILT-UP AREA OF THE PROJECT OR 2,000 SQ. FT. WHICHEVER IS LESS. IT IS NOTICED THAT THE PROVISIONS AS IT STOOD AT DI FFERENT POINT OF TIME UNIFORMLY CONTEMPLATES APPROVAL BY LOCAL AUTHORITY. FROM ASST. YR. 2002-03 TIME OF APPROVAL BY THE LOCAL AUTHORITY ASSUMED IMP ORTANCE. COMMENCEMENT OF PROJECT IS NOT OF ANY IMPORTANCE BE CAUSE IT DATES BACK TO 1ST OCT., 1998 THE STARTING POINT WHEN THE INCEN TIVE PROVISION PROVIDING FOR DEDUCTION OF PROFITS FROM HOUSING PROJECTS WERE INTRODUCED. UP TO ASST. YR. 2004-05, THE PROVISION DID NOT IMPOSE ANY PERIO D WITHIN WHICH THE PROJECT HAS TO BE COMPLETED, EXCEPT IN ASST. YRS. 2 000-01 AND 2001-02. IN ASST. YR. 2001-02, THE CONDITION WAS THAT THE PROJE CT SHOULD BE COMPLETED BEFORE 31ST MARCH, 2003. FROM ASST. YR. 2005-06, TH E TIME WITHIN WHICH THE PROJECT HAS TO BE COMPLETED HAS BEEN GIVEN IMPORTAN CE. 26. THERE IS TRUTH IN THE PLEA OF HARDSHIP PUT FORT H ON BEHALF OF THE ASSESSEE. LET US ASSUME AN ASSESSEE APPLIES AND OBT AINS APPROVAL OF A LOCAL AUTHORITY FOR BUILDING A HOUSING PROJECT IN T HE PREVIOUS YEAR RELEVANT TO ASST. YR. 2002-03. AS PER THE LAW AS IT STOOD IN THE PREVIOUS YEAR RELEVANT TO ASST. YR. 2002-03 UP TO 2004-05, THERE WAS NO TI ME-LIMIT WITHIN WHICH THE CONSTRUCTION HAS TO BE COMPLETED OR ANY RESTRICTION REGARDING COMMERCIAL AREA THAT CAN BE BUILT IN A HOUSING PROJECT. LET US ASSUME THAT THE ASSESSEE COMPLIES WITH ALL THE CONDITIONS FOR ALLOWING RELIE F UNDER S. 80-IB(10), I.E., IT IS APPROVED AS A HOUSING PROJECT BY THE LOCAL AUTHO RITY BUT THE AREA OF COMMERCIAL SPACE AS APPROVED BY THE LOCAL AUTHORITY IS MORE THAN 2,000 SQ. FT. THE ASSESSEE COMMENCES THE PROJECT BUT IS ABLE TO COMPLETE ONLY IN THE PREVIOUS YEAR RELEVANT TO ASST. YR. 2005-06. AS PER THE CHANGE IN LAW FROM ASST. YR. 2005-06 WITH REGARD TO THE AREA OF COMMER CIAL SPACE IN A HOUSING PROJECT THE ASSESSEE WOULD LOOSE HIS ELIGIBILITY TO CLAIM DEDUCTION. IN SUCH CASES, THERE IS DEFINITELY GRAVE HARDSHIP TO THE AS SESSEE. THE INTERPRETATION SOUGHT TO BE CANVASSED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WILL ALSO LEAD TO ABSURD SITUATION. LET US ASSUME AN ASS ESSEE OBTAINS APPROVAL OF A HOUSING PROJECT PRIOR TO 1ST APRIL, 2005 SAY I N PREVIOUS YEAR RELEVANT TO ASST. YR. 2002-03. HE BUILDS COMMERCIAL SPACE IN EX CESS OF 2,000 SQ. FT. IN THE HOUSING PROJECT. HE FOLLOWS PERCENTAGE COMPLETI ON METHOD OF ACCOUNTING AND OFFERS PROFITS IN ASST. YRS. 2002-03 TO 2004-05, CLAIMS EXEMPTION UNDER S. 80-IB(10) AND IS ALLOWED EXEMPTI ON. ON THE SAME PROJECT IN ASST. YR. 2005-06, THE ASSESSEE WOULD NO T GET THE BENEFIT OF S. 80- IB(10). WE, THEREFORE, FIND NO GROUNDS TO TAKE A VI EW DIFFERENT FROM THE ONE ITA NO.1907/M/2010 M/S.VINAMRA BUILDERS 5 TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF SAROJ SALES ORGANISATION (SUPRA). 27. WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING AN Y WORDS TO THE 'STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABI LITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACC ORDED ON 17TH NOV., 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE, THE SUBMISSIONS OF THE LEARNED DEPARTMEN TAL REPRESENTATIVE IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF S. 80-IB(10) AS AM ENDED BY THE FINANCE ACT, 2005, W.E.F. 1ST APRIL, 2005. WE, THEREFORE, HOLD F OLLOWING THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) THAT THE L AW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS P ROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17TH NOV., 2003 AND WHEN THE ASSESSEE C OMMENCED DEVELOPMENT IS TO BE APPLIED. 7 RESPECTFULLY FOLLOWING THE DECISION OF THE COORDI NATE BENCHES OF THE TRIBUNAL IN THE CASE OF HIRANANDANI AKRUTI, JV (SUP RA) AND THE DECISION IN THE CASE OF SAROJ SALES ORGANISATION (SUPRA) AND IN ABS ENCE OF ANY CONTRARY DECISION OR DISTINGUISHABLE FEATURE BROUGHT ON RE CORD BY THE LD DR, WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT(A) DEL ETING THE DISALLOWANCE. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. FOLLOWING THE ABOVE ORDERS, WE DECIDE THE ISSUE AGA INST THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED ON THE 20TH DAY OF JANUARY, 2012. SD/- SD/- (D. MANMOHAN) (T .R. SOOD) VICE PRESIDENT ACCOUNT ANT MEMBER MUMBAI: 20TH JANUARY , 2012. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-26, MUMBAI. 4 CIT,CITY-15, MUMBAI. 5.DR,E BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) ITA NO.1907/M/2010 M/S.VINAMRA BUILDERS 6 BY ORDER, ASST.REGISTRAR, ITAT , MUMBAI. ITA NO.1907/M/2010 M/S.VINAMRA BUILDERS 7 DETAILS DATE INITIALS DESIGNATI ON 1. DRAFT DICTATED ON 16-01-2012 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 17-01-2012 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER