Income-tax Officer, V. M/s. Sameer Developers, Pune

ITA 201/PUN/2014

• Counselvise Citation: 20124514 RSA 2014
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B D SINGH
• Assessee Lawyers: S N DOSHI; SUDEEP V CHHALLANI
• Section: 6

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS. 200 & 201/PN/2014 (ASSESSMENT YEARS : 2009-10 & 2010-11) ITO, WARD-5(4), PUNE .. APPELLANT VS. M/S. SAMEER DEVELOPERS, 58, YASMIN, SAHYOG SOCIETY, BIGWAN ROAD, BARAMATI, DIST : PUNE 413102 PAN NO. ABBFS9236J .. RESPONDENT ASSESSEE BY : SHRI S.N.DOSHI & SHRI SUDEEP V. CHHALLANI DEPARTMENT BY : SHRI B.D. SINGH DATE OF HEARING : 13-01-2015 DATE OF PRONOUNCEMENT : 19-01-2015 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE COMMON ORDER DATED 07-11-2013 OF THE CI T(A)- III, PUNE RELATING TO ASSESSMENT YEARS 2009-10 & 20 10-11 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE, THESE W ERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. ITA NO.200/PN/2014 (A.Y.2009-10) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVI TIES. IT FILED ITS RETURN OF INCOME ON 31-10-2009 DECLARING TOTAL INCOME OF RS.1,63,000/- AFTER CLAIMING DEDUCTION OF RS.91,13,600/- U/S.80IB(10) OF THE I.T. ACT. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER 2 OBSERVED THAT THE ASSESSEE WAS DEVELOPING A HOUSING PROJECT AT JALOCHI IN BARAMATI IN RESPECT OF WHICH THE DEDUCTION U/S.80IB(10) AT RS.91,13,600/- HAS BEEN C LAIMED BY THE ASSESSEE. HE OBSERVED THAT THE PROJECT HAD A SANCTION OF 7 BUILDINGS AS PER SANCTION DATED 16-09 -2004 AND THEREFORE THE SAME WERE TO BE COMPLETED AND SUPPORTED BY COMPLETION CERTIFICATE ISSUED BY THE L OCAL AUTHORITY ON OR BEFORE 31-03-2009 AS PER THE PROVIS IONS OF SECTION 80IB(10)(A)(II). HE THEREFORE ASKED THE AS SESSEE TO SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S.80IB(10). FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, HE OBSER VED THAT OUT OF THE 7 BUILDINGS SANCTIONED AS PER PLAN OF SA NCTION ONLY 6 BUILDINGS WERE COMPLETED UPTO 31-03-2009. H E THEREFORE ASKED THE ASSESSEE AS TO WHY THE DEDUCTIO N CLAIMED U/S.80IB(10) SHOULD NOT BE DISALLOWED FOR N ON COMPLIANCE OF THE CONDITION OF COMPLETION OF THE PR OJECT. 2.1 THE ASSESSEE SUBMITTED THAT ALL THE BUILDINGS W ERE COMPLETE AND SUPPORTED BY COMPLETION CERTIFICATE IS SUED BY THE GRAM PANCHAYAT, VILLAGE JALOCHI. RELYING ON VA RIOUS DECISIONS IT WAS ARGUED THAT THE DEDUCTION U/S.80IB (10) COULD BE CLAIMED ON A STAND ALONE BASIS IF THE CON DITIONS LAID DOWN THEREIN ARE INDEPENDENTLY COMPLIED WITH B Y THE RESPECTIVE BUILDINGS. 3. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT TH E CONTENTION OF THE ASSESSEE. ACCORDING TO HIM, THE HOUSING PROJECT AS SANCTIONED BY THE LOCAL AUTHORITY CONSIS TED OF 7 BUILDINGS AND THEREFORE IT WAS INCUMBENT UPON THE A SSESSEE TO ENSURE COMPLETION OF THE ENTIRE PROJECT BEFORE T HE PRESCRIBED DATE AND SUCH COMPLIANCE CANNOT BE DONE IN 3 PART. FURTHER, THE CLAIM OF THE ASSESSEE THAT ALL THE 7 BUILDINGS WERE COMPLETE BY 31-03-2009 WAS ALSO HELD TO BE NOT RELIABLE BY THE ASSESSING OFFICER ON THE GROUND THAT ALTHOUGH COMPLETION CERTIFICATE TO THE EFFECT OF CO MPLETION OF ALL 7 BUILDINGS WERE FURNISHED BY THE ASSESSEE FROM THE GRAM PANCHAYAT, HOWEVER, NO SUCH CERTIFICATE WAS OB TAINED FROM THE TOWN PLANNING AUTHORITIES CERTIFYING THE C OMPLETION OF THE HOUSING PROJECT. HE NOTED THAT BUILDING NO. 1 WAS NOT COMPLETE AS ON 31-03-2009 WHICH WAS VERIFIED FROM T HE REPORT OF THE INSPECTOR DEPUTED BY HIM WHO HAD REPO RTED THAT THE BUILDING NO.1 WAS COMPLETE ONLY AFTER 31-1 2-2009 AND THE ELECTRICITY METERS ETC. WERE YET TO BE TRAN SFERRED IN THE NAMES OF THE PURCHASERS. FURTHER, THE AUDITORS IN THEIR REPORT IN FORM NO. 10CCB UNDER COLUMNNO.3 HAS ALSO CERTIFIED THAT ONLY BUILDING NOS. 2 TO 6 WERE COMPL ETE. SINCE BUILDING NO.1 WAS INCOMPLETE AS ON 31-03-2009, THE ASSESSING OFFICER HELD THAT THE HOUSING PROJECT OF THE ASSESSEE DID NOT FULFIL THE CONDITION LAID DOWN IN SECTION 80IB(10)(A)(II) AND THEREFORE THE ASSESSEE IS NOT E NTITLED TO DEDUCTION U/S.80IB(10). THE ASSESSING OFFICER ACCO RDINGLY DISALLOWED THE CLAIM OF DEDUCTION OF RS.91,13,600/- . 4. IN APPEAL THE LD.CIT(A) HELD THAT DEDUCTION U/S.80IB(10) SHOULD BE ALLOWED TO THE ASSESSEE IN R ESPECT OF BUILDING NOS. 2 TO 6 WHICH WERE COMPLETED BEFORE 31 -03- 2009. THE RELEVANT OBSERVATIONS OF THE LD.CIT(A) F ROM PARA 6 TO 6.2 ARE AS UNDER : THE ISSUE THAT NEEDS TO BE ADJUDICATION IN THESE APPE ALS IS WHETHER DEDUCTION U/S.80IB(10) CAN BE AVAILED BY THE APPELLANT WITH RESPECT TO THE PROFIT ATTRIBUTABLE TO THE 06 BU ILDINGS COMPLETED BEFORE 31-03-2009. THERE IS NO DISPUTE THA T THE HOUSING PROJECT WAS SANCTIONED BY THE DY. DIVISIONAL OF FICER, BARAMATI ON 16-09-2004 AND AS PER THE RELEVANT PROVI SIONS OF 4 SEC. 80IB(10)(A)(II) THE PROJECT SHOULD HAVE BEEN COM PLETED BY 31-03-2009. THERE IS ALSO NO DISPUTE THAT OUT OF 07 B UILDINGS, 06 ARE COMPLETE AS ON THAT DATE OR THAT THE PROJECT WAS ENTIRELY A RESIDENTIAL PROJECT WITH NO COMMERCIAL AREA. THERE I S NO DISPUTE THAT THERE IS NO CASE WHERE THE BUILT UP AREA OF THE RESIDENTIAL UNITS EXCEEDED 1500 SQ.FT. IN THIS REGARD THE DECISION OF THE BOMBAY HIGH COURT IN VANDANA PROPERTIES 200 TAXMANN 584 HAS BEEN PERUSED. THE HIGH COURT HELD THAT IN THE AB SENCE OF ANY DEFINITION OF THE EXPRESSION 'HOUSING PROJECT'' UN DER THE INCOME TAX ACT, THE SAME HAD TO BE CONSTRUCTED IN CO MMON PARLANCE TO UNDERSTAND A BUILDING OR GROUP OF BUILDI NGS CONSISTING OF SEVERAL RESIDENTIAL UNITS. EXPLANATION TO SEC. 80IB(10) SUPPORTS THE CONTENTION THAT APPROVAL GRANTE D TO A BUILDING PLAN CONSTITUTED APPROVAL GRANTED TO A HOUSI NG PROJECT. THEREFORE, CONSTRUCTION OF EVEN ONE BUILDING WITH SE VERAL RESIDENTIAL UNITS OF THE SIZE NOT EXCEEDING 1000 SQ.FT. (APPLICABLE TO BOMBAY) WOULD CONSTITUTE A 'HOUSING PROJECT' WITHI N THE MEANING OF SEC. 80IB(10). A PERUSAL OF THIS DECISION SH OWS THAT THE HIGH COURT HAS IMPLICITLY APPROVED THE CONCEPT T HAT ON A PLOT HAVING AREA MORE THAN ONE ACRE, AN ASSESSEE CAN HAVE AS MANY HOUSING PROJECTS AS COULD BE POSSIBLE, PROVIDED THE COND ITIONS OF SEC. 80IB(10) ARE COMPLIED WITH. TO MY MIND, THEREF ORE, THE HONBLE BOMBAY HIGH COURT DECISION IN VANDANA PROPER TIES HAS APPROVED THE PRINCIPLE THAT EVEN ONE BUILDING COULD CONSTITUTE HOUSING PROJECT. IN THE PRESENT CASE, THERE IS NO DISPU TE THAT BUILDING NO.1 HAS NOT BEEN COMPLETED. THIS FACT IS NO T ONLY MENTIONED BY THE AUDITOR IN COLUMN 23 OF FORM NO. 1 0CCB, WHEREIN HE HAS CERTIFIED THAT THE BUILDING NOS. 2 TO 7 ARE COMPLETE, BUT ALSO FROM THE PHYSICAL VERIFICATION OF BUILDING NO.1 BY THE INSPECTOR. IT IS ALSO SO ADMITTED BEFORE THE ASS ESSING OFFICER (PARA 4.1.5 OF THE ASSESSMENT ORDER) AND IN THE WRITTEN SUBMISSION FILED IN THIS OFFICE DATED 07-11-2012. 6.1. DURING THE COURSE OF APPELLATE PROCEEDINGS, AN ALTERNATIVE CONTENTION HAS BEEN RAISED BY THE APPELLA NT, THAT IN CASE FULL DEDUCTION UNDER SECTION 80IB(10) CANNOT BE ALLOWED, THE APPELLANT MAY BE GRANTED PRO RATA DEDUCTION WIT H REFERENCE TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT NAMEL Y ON THE 06 BUILDINGS COMPLETED BEFORE 31-03-2009 ON STAND-ALONE BASIS. THE ISSUE OF PRORATA DEDUCTION HAS BEEN OVERWHELMINGLY APPROVED BY SEVERAL JUDICIAL AUTHORITIES NAMELY, MADR AS HIGH COURT IN VISHWAS PROMOTERS PVT. LTD. VS ACIT (81 DTR 68 ), ITAT CHENNAI IN ARUN EXCELLO FOUNDATION PVT. LTD. (108 T TJ 71) PUNE ITAT IN D.S. KULKARNI DEVELOPERS PVT. LTD., RAHUL CONSTRUCTION (ITA NO.1250/PN/2009 AND 707/PN/2010), D.B.S DEVELO PERS BUILDERS AND PROMOTERS (ITA NOS. 258 TO 260/PN/2011) A ND TUSHAR DEVELOPERS, NAGPUR BENCH ITAT IN AIR DEVELOPER S (123 TTJ 359), BANGALORE ITAT IN DCIT VS. BRIGADE ENTERPR ISES PVT. LTD., (24 DTR 371) AND SJR BUILDINGS AND MUMBAI ITAT IN DCIT VS. EKTA HOUSING PVT. LTD., HIRANANDANI AKRUTI, SAROJ SALES ORGANISATION (115 TTJ 48) AND SHETH DEVELOPERS PVT. L TD., (33 SOT 277). 6.2 KEEPING IN VIEW THE JUDICIAL PRECEDENTS CITED AB OVE, IT IS HELD THAT THE APPELLANT IS ENTITLED TO DEDUCTION IN RESPECT OF INCOME DERIVED FROM THE COMPLETED FLATS IN BUILDING NOS. 2 TO 7 IN THE RESIDENTIAL PROJECT AT JALOCHI, BARAMATI U/S.8 0IB(10). GROUND NO. 1 IS TREATED AS PARTLY ALLOWED SUBJECT TO T HE ABOVE DIRECTIONS. 5 5. AGGRIEVED WITH SUCH RELIEF GRANTED BY THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING G ROUNDS : 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS) IS CONTRARY TO THE LAW AND FACTS AND CIRCUMST ANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS N OT APPRECIATE THAT THE ASSESSEE HAS FAILED TO OBTAIN COMPL ETION CERTIFICATE OF THE HOUSING PROJECT 'AT VILLAGE-JALOC HI, GAT NO. 157, TALUKA- BARAMATI, DIST- PUNE BEFORE 31.03.2009 AS REQ UIRED UNDER EXPLANATION (II) TO SEC. 80IB(10) OF THE I. T . ACT. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED ON FACTS AND IN LAW, ALLOWING THE DEDUCTION U/S 80IB(10) WHEN THE ASSESSEE HAD COMPLETED ONLY SIX BUILDING OUT OF 7 BUILDI NG UPTO 31.03.2009 WHEREAS, THE PLAN WAS APPROVED BY LOCAL AU THORITY FOR 7 BUILDINGS THUS THE ASSESSEE VIOLATED THE PROVISION OF SUB SECTION (II) OF CLAUSE (A) TO SECTION 80IB(10) OF THE ACT, 1961. 4. FOR THESE AND SUCH ABOVE OTHER GROUNDS AS MAY BE URG ED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNE D CIT(APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE REST ORED. 5. THE APPELLANT CRAVES, LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUND OF APPEAL DURING THE COURSE OF THE APPELLANT PROCEEDINGS BEFORE THE ITAT. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFI CER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF TH E ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT TH AT IN THE INSTANT CASE OUT OF THE 7 BUILDINGS OF THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE, 6 BUILDINGS, I.E. BUILD ING NO. 2 TO 7 WERE COMPLETED BY THE ASSESSEE BEFORE 31-03-20 09 AND ONLY BUILDING NO.1 WAS INCOMPLETE AS ON 31-03-2 009. THEREFORE, THE ISSUE TO BE DECIDED IS AS TO WHETHER THE ASSESSEE IS ENTITLED FOR PROPORTIONATE DEDUCTION IN RESPECT OF THE 6 BUILDINGS WHICH WERE COMPLETED BEFORE 31-03-2 009 OR THE ENTIRE DEDUCTION SHOULD BE DISALLOWED. THE ISS UE OF PROPORTIONATE DEDUCTION HAS BEEN DECIDED IN FAVOUR OF THE 6 ASSESSEE BY SERIES OF DECISIONS OF THE COORDINATE B ENCHES OF THE TRIBUNAL. THE HONBLE MADRAS HIGH COURT IN THE CASE OF VISHWAS PROMOTERS PVT. LTD. VS. ACIT REPORTED IN 25 5 CTR 149 HAS HELD THAT WITHIN A COMPOSITE HOUSING PROJEC T WHERE THERE ARE ELIGIBLE AND INELIGIBLE UNITS, THE ASSESS EE CAN CLAIM DEDUCTION IN RESPECT OF ELIGIBLE UNITS IN THE PROJE CT AND EVEN WITHIN THE BLOCK THE ASSESSEE IS ENTITLED TO CLAIM PROPORTIONATE RELIEF IN THE UNITS SATISFYING TO THE EXTENT OF THE BUILT UP AREA. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LD. VS. C IT VIDE ITA NO.453/2006 ORDER DATED 05-01-2007 HAS ALS O HELD THAT PRO-RATA DEDUCTION IS PERMISSIBLE U/S.80IB(10) . FOLLOWING THE ABOVE DECISIONS, THE COORDINATE BENCH ES OF THE TRIBUNAL ARE CONSISTENTLY TAKING THE VIEW THAT THE ASSESSEE IS ENTITLED TO PRO-RATA DEDUCTION IN RESPE CT OF THE INCOME DERIVED FROM THE ELIGIBLE UNITS. SINCE THE LD.CIT(A) WHILE DECIDING THE ALTERNATE CLAIM OF PRO-RATA DEDU CTION HAS FOLLOWED THE DECISION OF THE HONBLE MADRAS HIGH CO URT AND THE DECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL, T HEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ). WE ACCORDINGLY UPHOLD THE SAME. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. ITA NO.201/PN/2014 (A.Y. 2010-11) : 7. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUND S RAISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS RAISED IN ITA NO.200/PN/2014. WE HAVE ALREADY DECIDED THE IS SUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN 7 DISMISSED. FOLLOWING THE SAME RATIO, THE GROUNDS R AISED BY THE REVENUE IN THE ABOVE APPEAL ARE ALSO DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19-01-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 19 TH JANUARY, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-III, PUNE 4. CIT-III, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE