Assistant Commissioner of Income-tax, Pune V. Kumar Builders Consortium, Pune

ITA 2002/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7238 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2016
• Assessment Year: misc
• Appeal Filed On: 11-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 2002 /P U N/201 4 / ASSESSMENT YEAR : 20 1 1 - 1 2 THE DY . COMMISSIONER OF INCOME TAX, CIRCLE 4 , PUNE . / APPELLANT VS. VS. KUMAR BUILDER CONSORTIUM, 10 TH FLOOR, KUMAR BUSINESS CENTRE, BUND GARDEN, OPP. PUNE CENTRAL, PUNE 411001 . / RESPONDENT PAN: AA HFK7992A / APPELLANT BY : S HRI A.K. MODI / RESPONDENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 0 5 . 0 1 .201 7 / DATE OF PR ONOUNCEMENT: 13 . 0 1 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - II , PUNE, DATED 18 . 0 8 .20 1 4 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(10) IN RESPECT OF PROJECT S KUMAR KRUTI AND KUMAR SHANT IN IKETAN. 2) THE L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE IMPORT OF SECTION 80IB(10) WHICH SPEAKS ABOUT APPRECIATING THE IMPORT OF SECTION 80IB(10) WHICH SPEAKS ABOUT SANCTION TO THE ' HOUSING PROJECT' AND NOT TO THE INDI VIDUAL BUILDINGS IN THE PROJECT ITA NO. 2002 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 2 3) THE L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT KUMAR KRUTI PROJECT IS A PART OF LARGER PROJECT I . E . KUMAR CITY WHICH WAS APPROVED ON 08 . 08 . 2003 AND THE HOUSING PROJECT HAD NOT BEEN COMPLETED BY 31.03 . 2008, THUS VIOLATING THE CONDITIONS PROVI DED IN CLAUSE (A) TO SECTION 801B(10) OF THE ACT . CONDITIONS PROVI DED IN CLAUSE (A) TO SECTION 801B(10) OF THE ACT . 4) THE L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING PRO - RAT A CLAIM OF DEDUCTION U/S.80IB(10) IN RESPECT OF ELIGIBLE FLATS IN THE PROJECT KUMAR KRUTI IN SPITE OF VIOLATION OF CLAUSE (C) W ITHOUT APPRECIATING THE FACT THAT JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, 333 ITR 289 HELD THAT DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PAR T OF THE PROJECT . 5) THE L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN ALLOWING PRO - RAT A DEDUCTION U/S . 80IB(10) ON QUALIFYING UNITS IN RESPECT OF KUMAR SHANTINIKETAN PROJECT WITHOUT APPRECIATING THE FACT THAT THE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS . BRAHMA ASSOCIATES, 333 ITR 289 HELD DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO A PART OF THE PROJECT . 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ORDER OF CIT(A) IN ALLOWING DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROJECTS KUMAR KRUTI AND KUMAR SHANTINIKETAN. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN T HE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEARS FROM ASSESSMENT YEARS 2008 - 09 TO 20 1 0 - 1 1 . 5 . BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPING RESI DENTIAL PROJECTS IN PUNE. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF CONSIDERATION , THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR THE PROJECT KUMAR SHANTINIKETAN, WHICH WAS SITUATED AT S.NO.138/5, PASHAN AND COMPRISED OF 8 BUILDINGS. THE ASSESSEE W AS RECOGNIZING THE INCOME BY FOLLOWING THE PERCENTAGE COMPLETION METHOD OF ACCOUNTING. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT IN RESPECT OF THE SAID PROJECT, TWO OF THE FLATS BEARING NOS.3 AND 4 IN D BUILDING HAD A GARDEN AREA OF 236.03 SQ. FT. , WHICH WAS NOT ON THE GROUND FLOOR BUT WAS HAD A GARDEN AREA OF 236.03 SQ. FT. , WHICH WAS NOT ON THE GROUND FLOOR BUT WAS ON PODIUM. THE SAID GARDEN AREA WAS FOR THE EXCLUSIVE USE OF THE SAID TWO FLAT ITA NO. 2002 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 3 OWNERS. THE GARDEN AREA WAS COVERED AND WAS NOT OPEN TO SKY. FURTHER, IT WAS SOLD TO THE FLAT OWNER A T A PRICE. THE ASSESSING OFFICER IN VIEW THEREOF, RELATING TO ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 , COMPUTED THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AFTER INCLUDING THE GARDEN AREA IN THE FLAT AREA OF THE SAID TWO FLATS AND DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. SINCE NO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS ALLOWED FOR ASSESSMENT YEARS 2008 - 09 , 2009 - 10 AND 2010 - 11 , THE ASSESSING OFFICER FURTHER DISALLOWED THE CLAIM OF THE ASSESSEE FOR CAPTIONED ASSESSMENT YE AR. FURTHER, THE ASSESSING OFFICER ALSO NOTED THAT IN RESPECT OF SECOND PROJECT KUMAR KRUTI, SITUATED AT KALYANI NAGAR, THE PROJECT WAS FOUND TO BE PART OF ONE BIGGER PROJECT KUMAR CITY, WHICH WAS SANCTIONED ON 08.08.2003 . THE ORIGINAL PLAN WAS SUBSEQUEN TLY REVISED SEVERAL TIMES INCLUDING ON 02.03.2005 AND FURTHER ON 30.03.2007. IN THE REVISED SANCTIONED PLAN ON 02.03.2005 , THE SAID 12 BUILDINGS A - 1 TO A - 12 OF THE PROJECT KUMAR KRUTI WERE SHOWN. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROJECT KUM AR KRUTI WAS PART OF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROJECT KUM AR KRUTI WAS PART OF THE LARGER PROJECT KUMAR CITY, WHICH IN TURN, WAS SANCTIONED ON 08.08.2003 . ACCORDINGLY, THE PROJECT WAS REQUIRED TO BE COMPLETED BY 31.03.2008 . HOWEVER, THE ASSESSEE HAD FAILED TO COMP L ETE THE SAID PROJECT BY 31.03.2008 . FURTHER, I N THE SAID PROJECT , 8 OF THE FLATS WERE FOUND TO HAVE AREA MORE THAN MAXIMUM PERMISSIBLE AREA OF 1500 SQ. FT. SINCE THE FLATS HAD GARDEN AREA FOR EXCLUSIVE USE OF THE FLAT OWNERS OF 635 SQ. FT., THE SAID GARDEN AREA WAS NOT ON THE GROUND FLOOR, BUT WAS AR EA OF SAID 8 FLATS, THE TOTAL AREA OF THE FLAT WAS 2029 SQ. FT., WHICH WAS MORE THAN THE MAXIMUM PERMISSIBLE BUILT UP AREA AND FOLLOWING THE ASSESSMENT ORDERS RELATING TO ASSESSMENT YEAR S 2008 - 09 , 2009 - 10 AND 2010 - 11 , THE DEDUCTION CLAIMED UNDER SECTION 80 IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR KRUTI WAS DENIED TO THE ASSESSEE. ITA NO. 2002 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 4 6 . THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN TURN, FOLLOWING THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1164/PN/2012 RELATING TO ASSE SSMENT YEAR 2008 - 09 AND ITA NO.2210/PN/2012 RELATING TO ASSESSMENT YEAR 2009 - 10 , ORDER DATED 15.04.2013 . THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA S 3.4 TO 3.5 AT PAGES 4 TO 6 OF THE APPELLATE ORDER. THE TRIBUNAL HAD DIRECTED THE ASS ESSING OFFICER TO ALLOW PRORATA DEDUCTION IN RESPECT OF ELIGIBLE FLATS NOT EXCEEDING PRESCRIBED LIMIT OF COVERED AREA OF 1500 SQ. FT. AFTER EXCLUDING FLATS EXCEEDING 1500 SQ. FT. THE SAID FINDINGS WERE IN RESPECT OF PROJECT KUMAR SHANTINIKETAN . FURTHER , THE CIT(A) ALSO ALLOWED THE PRORATA CLAIM UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR KRUTI , WHEREIN ALSO THE TRIBUNAL CONSIDERED THE ISSUE IN THE EARLIER YEARS AND THE ASSESSING OFFICER WAS DIRECTED TO RE - WORK THE DEDUCTION IN RESPEC T OF UNITS HAVING COVERED AREA OF 1500 SQ. FT. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA S 4.2 AND 4.3 AT PAGES 7 TO 1 0 OF THE APPELLATE ORDER. THE CIT(A) IN VIEW THEREOF, 4.2 AND 4.3 AT PAGES 7 TO 1 0 OF THE APPELLATE ORDER. THE CIT(A) IN VIEW THEREOF, DIRECTED THE ASSESSING OFFICER TO RE - WORK DEDUCTION IN RESPEC T OF ASSESSEES PROJECT KUMAR KRUTI AS PER THE DIRECTIONS OF TRIBUNAL DATED 15.04.2013 AND ALLOW PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF TWO PROJECTS UNDERTAKEN BY THE ASSESSEE I.E. KUMAR KRUTI AND KUMAR SHANTINIKETAN . THE FIRST ISSUE IS IN RELATION TO PRORATA CLAIM OF DEDUCTION IN RESPECT OF PROJ ECT KUMAR SHANTINIKETAN . TWO OF THE FLAT BEARING NOS.3 AND 4 IN BUILDING D HAD COVERED AREA EXCEEDING 1500 SQ.FT. AND ON THAT BASIS, THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT WAS DENIED TO THE ASSESSEE. THE TRIBUNAL HAD IN THE EARLIER YEA RS RELATING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 , ALLOWED THE CLAIM OF ITA NO. 2002 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 5 ASSESSEE WITH DIRECTIONS TO THE ASSESSING OFFICER TO ALLOW PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AND DENIED THE SAID DEDUCTION IN RESPECT OF TWO FLATS I.E. FLAT NOS.3 A ND 4 IN BUILDING D , WHICH HAD COVERED AREA OF MORE THAN PRESCRIBED LIMIT. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED UNDER PARA S 3.4 AND 3.5 AT PAGES 4 TO 6 OF THE APPELLATE ORDER , WHICH ARE BEING REFERRED TO, BUT NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ISSUE IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN THE EARLIER YEARS, FOLLOWING THE SAME PARITY OF REASONING, WE DIRECT THE ASSESSING OFFICER TO RE - WORK PRORATA DEDU CTION UNDER SECTION 80IB(10) OF THE ACT. 8 . THE SECOND ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF PROJECT KUMAR KRUTI. THE SAID DEDUCTION WAS DENIED TO THE ASSESSEE ON ACCOUNT OF TWO ACCOUNTS I.E. WHERE THE PROJECT KUMAR KRUTI WAS PART OF LARGER PROJECT NAMED KUMAR CITY , AND WHERE THE ASSESSEE HAD NOT COMPLETED THE PROJECT BY 31.03.2008 , DEDUCTION WAS NOT ALLOWED TO THE ASSESSEE. THE TRIBUNAL AFTER CONSIDERING THE I SSUE, HELD THAT THE PROJECT KUMAR KRUTI WAS AN INDEPENDENT PROJECT SINCE THE BUILDING PLAN OF THE SAID PROJECT WAS SANCTIONED INDEPENDENTLY ON 16.07.2006 AND IN VIEW THEREOF, THERE WAS NO JUSTIFICATION IN HOLDING THAT THE PROJECT KUMAR KRUTI WAS PART OF KU MAR CITY. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRO D U C ED UNDER PARA S 4.2 AND 4.3 AT PAGES 7 TO 10 OF THE APPELLATE ORDER, WHICH ARE BEING REFERRED TO, BUT NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. THE TRIBUNAL FURTHER HELD THAT THE ASSESSEE WAS ENTITLED TO PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF ELIGIBLE UNITS, WHICH WERE WITHIN COVERED AREA LIM IT OF 1500 SQ.FT. HOWEVER, FEW FLATS , WHICH EXCEEDED THE PRESCRIBED COVERED AREA WERE DENIED THE DEDUCTION UNDER SECTION 80IB( 10) OF THE ACT. ITA NO. 2002 /PN/20 1 4 KUMAR BUILDER CONSORTIUM 6 9 . THE PUNE BENCH OF TRIBUNAL FURTHER IN ASSESSEES OWN CASE IN ITA NO.923/PN/2014 RELATING TO ASSESSMENT YEAR 2010 - 11 VIDE ORDER DATED 16.10.2015 HAD DIRECTED THE ASSESSING OFFICER TO WORK OUT THE PRORATA DEDUCTION IN RESPECT OF UNITS SO LD IN KUMAR KRUTI PROJECT AND RE - WORK PRORATA DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IN RESPECT OF KUMAR SHANTINIKETAN. FOLLOWING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF CIT(A) IN DIRECTING THE ASSESSING OFFICER TO WORK OUT THE PRORAT A DEDUCTION IN RESPECT OF UNITS SOLD IN KUMAR KRUTI PROJECT AND KUMAR SHANTINIKETAN . IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 10 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED ON THIS 13 TH DAY OF JANUARY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 13 TH JANUARY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPO NDENT; 3. ( ) / THE CIT (A) - II , PUNE ; 4. / THE CIT - II, PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // ASSIS TANT REGISTRAR