ITO 19(3)(4), MUMBAI V. MR. SALIM A. LALANI, MUMBAI

ITA 2017/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84445 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 04-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYA KUMAR BORA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'H' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 2017/MUM/2011 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER-19(3)(4) VS. SHRI SALIM A. LALANI ROOM NO. 304, 3RD FLOO PIRAMAL CHAMBERS, LALBAUG MUMBAI 400012 6TH FLOOR, DHEERAJ PLAZA OPP. BANDRA POLICE STATION BANDRA (W), MUMBAI 400050 PAN - AAAPL3250B APPELLANT RESPONDENT APPELLANT BY: SHRI VIJAYA KUMAR BORA RESPONDENT BY: NONE DATE OF HEARING: 17.12.2014 DATE OF PRONOUNCEMENT: 17.12.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-30, MUMBAI AND IT PERTAINS TO AY 2007-08. 2. THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE: - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN TREATING THE UNDERTAKIN G IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE I.T. ACT, 1961 AN D NOT THE HOUSING PROJECT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THAT THE HOUSING P ROJECT UNDERTAKEN BY THE ASSESSEE HAS COMMENCED AFTER 01.1 0.1998 AND AS SUCH THE SAME IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE I.T. ACT, 1961 IGNORING THE FACT THAT THE ORIGI NAL COMMENCEMENT CERTIFICATE IN RESPECT OF THE PROJECT WAS GRANTED IN THE YEAR 1996. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT EACH ASSESSMENT YEAR IS AN INDEPENDENT UNIT AND ERRED IN HOLDING TH AT THE FINDING GIVEN IN ONE YEAR ON PARTICULAR SET OF FACTS ARE BI NDING ON SUBSEQUENT YEARS WHEN NEW FACTS HAVE BEEN BROUGHT O N RECORDS. ITA NO. 2017/MUM/2011 SHRI SALIM A. LALANI 2 (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THAT THE COMME RCIAL AREA IN THE HOUSING PROJECT UNDERTAKEN BY THE ASSESSEE WAS LESS THAN 2000 SQ.FT. IN THE SPITE OF THE SPECIFIC REPLY OF T HE EXECUTIVE ENGINEER OF BMC THAT THE COMMERCIAL AREA IN THE HOU SING PROJECT UNDERTAKEN BY THE ASSESSEE WAS MORE THAN 2000 SQ.FT . AND ALSO IGNORING THE FACT THAT THE ASSESSEE HAS CONSTRUCTED AND SOLD SHOPS HAVING BUILT UP AREA OF MORE THAN 2000 SQ.FT. AND HOLDING THAT THE PROJECT IS ELIGIBLE FOR DEDUCTION U/S. 80I B(10 OF THE I.T. ACT, 1961. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HE ARD THE LEARNED D.R. APPEARED ON BEHALF OF THE REVENUE AND CAREFULL Y PERUSED THE RECORD. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. ASSESSEE IS A BUILDER AND DEVELOPER. FOR THE YEAR UNDER CONSIDERA TION HE HAS SHOWN PROFIT FROM HIS PROJECT M/S. JYOTI COMPLEX AND CLAIMED E XEMPTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THE AO WAS OF THE OPINION THAT TWO CONDITIONS WERE NOT FULFILLED BY THE ASSESSEE IN OR DER TO AVAIL DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, I.E., (A) THE PR OJECT WAS COMMENCED PRIOR TO 01.10.1998, BASED ON THE COMMENCEMENT CERTIFICAT E ISSUED BY THE MUNICIPAL CORPORATION IN RESPONSE TO AN APPLICATION DATED 28.08.1994. IN OTHER WORDS, THE PROJECT WAS NOT COMMENCED AFTER 01 .10.1998, AND (B) THE BUILT UP AREA OF SHOPS IN THE PROJECT IS 189.97 SQ. MTS. WHICH IS EQUIVALENT TO 2044 SQ.FT. ON THE OTHER HAND, IN ORDER TO AVAIL TH E BENEFIT UNDER SECTION 80IB(10) THE COMMERCIAL AREA SHOULD BE LESS THAN 20 00 SQ.FT. IN THE PROJECT, WHICH WAS NOT FULFILLED BY THE ASSESSEE. HE, THEREF ORE, DENIED THE CLAIM OF EXEMPTION UNDER SECTION 80IB(10) OF THE ACT. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T IN SO FAR AS THE ASSESSEE IS CONCERNED THE COMMENCEMENT CERTIFICATE WAS ISSUED AFTER 01.10.1998. THE ORIGINAL COMMENCEMENT CERTIFICATE W AS GRANTED TO M/S. SHIVADARSHAN CO-OP. HOUSING SOCIETY WHICH ACQUIRED THE LAND. THE SAID SOCIETY GOT THE LAND CONVERTED FOR NON-AGRICULTURAL USE. THEREAFTER ONE OF THE PROMOTERS OF THE PROPOSED SOCIETY, SHRI MADHUKAR PA RSEKAR, ENTERED INTO AN MOU WITH THE ASSESSEE ON 23.05.2001 WHEREIN SOCIETY TRANSFERRED ALL THE RIGHTS, TITLE AND INTEREST IN THE DEVELOPMENT RIGHT S IN RESPECT OF SUB-DIVIDED PLOT/BUILDING FOR A LUMP SUM CONSIDERATION OF ` 72 LAKHS. THE MOU CLEARLY ITA NO. 2017/MUM/2011 SHRI SALIM A. LALANI 3 STATED THAT THE CHIEF PROMOTER HAD THE REQUIRED COM MENCEMENT CERTIFICATE WAY BACK IN 1996 AND THE COMMENCEMENT CERTIFICATE I SSUED TO THE PREVIOUS OWNER ON 30.08.1996 HAS LAPSED AS PER RULE NO. 5 WH ICH STATES THAT COMMENCEMENT CERTIFICATE CANNOT BE RENEWED BEYOND A PERIOD OF THREE YEARS FROM THE DATE OF FIRST ISSUE AND ONE CAN ONLY APPLY FOR A FRESH COMMENCEMENT CERTIFICATE. THE PLAN WAS FILED BY THE ASSESSEE AND APPROVAL WAS OBTAINED FOR THE FIRST TIME BY THE ASSESSEE ON 03.04.2002 WHICH ITSELF PROVES THAT NO CONSTRUCTION ACTIVITY HAS COMMENCED AS PER THE COMMENCEMENT CERTIFICATE ISSUED TO THE PREVIOUS OWN ER. SINCE THE COMMENCEMENT CERTIFICATE WAS ISSUED TO THE ASSESSEE IN 2002 THE QUESTION OF COMMENCEMENT OF PROJECT BY THE ASSESSEE PRIOR TO 23.04.2001 DOES NOT ARISE. 5. THE LEARNED CIT(A) ACCEPTED THE PLEA OF THE ASSESSE E AND HELD THAT DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT HAS COMMENCED ONLY AFTER 01.10.1998 AND HENCE EXEMPTION UNDER SECTION 80IB(10) CANNOT BE DENIED TO THE ASSESSEE ON THE GROUND OF COMMENCEMEN T OF CONSTRUCTION PRIOR TO 01.10.1998. 6. WITH REGARD TO THE PLEA OF THE REVENUE THAT THE BUI LT UP AREA IS MORE THAN 2000 SQ.FT. THE CASE OF THE ASSESSEE IS THAT T HE CARPET AREA AND BUILT UP AREA OF THE SHOPS THAT WERE CONSTRUCTED AND SOLD BY THE ASSESSEE WAS LESS THAN 2000 SQ.FT. AND EVEN OTHERWISE THE PROJECT OF THE ASSESSEE HAVING COMMENCED BEFORE THE AMENDMENT BROUGHT BY FINANCE ( NO. 2), 2004 THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION UN DER SECTION 80IB(10). THE LEARNED CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE AN D IN THIS REGARD OBSERVED AS UNDER: - 18. FROM THE ABOVE IT CAN BE SEEN THAT MY PREDECES SOR THE THEN CIT(A)-XIX HAS ALLOWED THE APPEAL OF THE APPELLANT IN HIS ORDER NO. CIT(A)-XIX/IT-465/06-07 FOR THE AY 2004-05 BY HOLDI NG THAT THE BUILT- UP AREA OF THE SHOPS IS NOT EXCEEDING 2000 SQ.FT.. HOWEVER, EVEN IF IT IS ARGUED THAT THE COMMERCIAL AREA IS EXCEEDING THE LI MIT OF 2000 SQ.FT., STILL THE CLAIM OF THE APPELLANT US 80IB(10) IS ALL OWABLE BECAUSE OF THE FACT THAT THE PROJECT OF THE APPELLANT HAD COMMENCE D BEFORE THE AMENDMENT BROUGHT OUT BY THE FINANCE (NO.2) ACT, 20 04 W.E.F. 1.04.2005. AS FAR AS THIS ISSUE IS CONCERNED I.E. W HETHER THE AMENDMENT BROUGHT OUT BY THE FINANCE (NO. 2) ACT, 2 004 W.E.F. 1-4- ITA NO. 2017/MUM/2011 SHRI SALIM A. LALANI 4 2005 IS APPLICABLE TO THE PROJECTS APPROVED PRIOR T O THE AMENDMENT I.E. IRRESPECTIVE OF THE APPROVAL DATE OF HOUSING PROJEC T, THE CONDITION PRESCRIBED IN NEW CLAUSE INSERTED I.E. CLAUSE (D) W ITH REFERENCE TO THE BUILT-UP AREA OF SHOPS AND COMMERCIAL ESTABLISHMENT S IS ALSO TO BE FULFILLED. I FIND THAT ON THIS VERY ISSUE THERE ARE 3 DECISIONS OF THE MUMBAI ITAT WHEREIN IT IS HELD THAT THE AMENDED LAW WOULD NOT BE APPLICABLE TO THE PROJECT APPROVED EARLIER. 7. IT DESERVES TO BE NOTICED THAT IN ASSESSEES OWN CA SE FOR AY 2004-05 THE ITAT E BENCH, MUMBAI VIDE THEIR ORDER IN ITA NO. 1398/MUM/2008 HELD THAT THE CONSTRUCTION OF HOUSING PROJECT HAS C OMMENCED ONLY AFTER 01.10.1998 AND THE SAME WAS FOLLOWED BY THE LEARNED CIT(A). 8. THE REVENUE, HOWEVER, FILED AN APPEAL BEFORE THE TR IBUNAL CONTENDING, INTER ALIA, THAT THE HOUSING PROJECT HAS COMMENCED PRIOR TO 01.10.1998 AND THE COMMERCIAL AREA OUGHT TO HAVE BEEN LESS THAN 20 00 SQ.FT. 9. AT THE TIME OF HEARING THE LEARNED D.R. FAIRLY ADMI TTED THAT THE FACTUAL MATRIX OF THE CASE IS NOT IN DISPUTE AND ON IDENTIC AL CIRCUMSTANCES THE ITAT IN ASSESSEES OWN CASE FOR AY 2004-05 OBSERVED THAT COMMENCEMENT OF THE PROJECT WAS SUBSEQUENT TO 01.10.1998 AND WHETHER OR NOT IT IS ADMITTED THAT THE COMMERCIAL AREA IS LESS THAN 2000 SQ.FT., DULY SUPPORTED BY BUILDING PLAN AND COMPLETION CERTIFICATE, THE ISSUE STANDS C OVERED BY THE DECISION OF THE ITAT CITED BY THE LEARNED CIT(A) AND NO CONTRAR Y VIEW, ON THIS, IS AVAILABLE SO AS TO SUPPORT THE STAND OF THE REVENUE . 10. HAVING REGARD TO THE FACTUAL MATRIX OF THE CASE AND UPON HEARING THE SUBMISSIONS OF THE LEARNED D.R. WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFEREN CE SINCE THE ULTIMATE DECISION IS BASED UPON THE FACTS OF THE CASE ALONGW ITH SUPPORTING CASE LAW. WE, THEREFORE, DISMISS THE APPEAL FILED BY THE REVE NUE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2014. (B.R. BASKARAN) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 17 TH DECEMBER, 2014 ITA NO. 2017/MUM/2011 SHRI SALIM A. LALANI 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 30, MUMBAI 4. THE CIT 19, MUMBAI CITY 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.