M/s. Shroff Developers, Pune V. Assistant Commissoner of Income-tax,

ITA 2055/PUN/2013

• Counselvise Citation: 205524514 RSA 2013
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: V L JAIN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2055/PN/2013 A.Y. 2010-11 M/S. SHROFF DEVELOPERS SHROFF HOUSE, S.NO.74+75/2/1, P.K. SHROFF MARG, NEAR SHROFF SUYASH, BANER, PUNE - 411045 PAN: AAXFS6555R APPLICANT VS. ACIT, CIRCLE-4, PUNE RESPONDENT APPELLANT BY : SHRI V.L. J AIN RESPONDENT BY : SHRI A.K . MODI, CIT DATE OF HEARING: 14.02.2014 DATE OF ORDER : 18.02.2014 ORDER PER G.S. PANNU, A.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [SHORT C IT(A)-II] PUNE, DATED 09.09.2013 FOR A.Y. 2010-11 ON THE FOLLOWING GROUNDS. 1. THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE OF THE CLAIM U/S 80IB ( 10) OF RS.1,86,24,252/-. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) HAS ERRED IN NOT GRANTING PRO RATA CLAIM, WITH REFERENC E TO THE ELIGIBLE PORTION OF THE HOUSING PROJECT. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL OR ADD TO THE SAME, IF DEEMED NEC ESSARY. 2 2. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE HAS POINTED OUT THAT THE ISSUE IN TH E APPEAL IS COVERED BY THE ASSESSEES OWN CASE FOR A.Y. 2007-08 IN ITA NO.754/PN/2010, WHEREIN IT WAS DECIDED AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE RECORD. THE MAIN PLANK OF THE ARGUMENT OF THE LD. COUNSEL IS THAT THE AMENITIES SPACE CANNOT BE E QUATED WITH COMMERCIAL SPACE AND EVEN IF ASSUMING IT IS A COMMERCIAL SPACE BUT STILL AS THE ASSESSEES PROJEC T IS SANCTIONED PRIOR TO 01-04-2005, THE LIMITATION PUT ON THE MAXIMUM COMMERCIAL AREA IN ANY HOUSING PROJECT IS N OT APPLICABLE TO THE ASSESSEES PROJECT AS THE ORIGINA L LAY OUT AND BUILDINGS PLAN WERE FIRST SANCTIONED ON 14-06-2 004. HE SUBMITS THAT AMENITIES BUILDING WHICH IS SAID TO BE COMMERCIAL IS AN INDEPENDENT BUILDING AND IS BUILT UP ON SPECIFIC MARKED AREA OF 1230 SQ. MTRS. WHICH IS AN INDEPENDENT PLOT CARVED OUT OF THE TOTAL AREA OF 82 00 SQ. MTRS. HE SUBMITS THAT INITIALLY THE PROJECT WAS ON THE PLOT OF LAND OF 4300 SQ. MTRS. BUT SUBSEQUENTLY ADJOINING P LOT WAS ACQUIRED AND HENCE, THE SEPARATE DEMARCATION WAS MA DE. HE RELIED ON THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MANAN CORPORATION VS. CIT 78 DTR 205 (G UJ) AND CIT VS. BRAHMA ASSOCIATES 333 ITR 289 (BOM). HE SU BMITS THAT ASSUMING WITHOUT GOING INTO CONTROVERSY WHETHE R IT IS A SINGLE PROJECT OR INDEPENDENT PROJECT OTHERWISE ALS O THE ASSESSEES PROJECT SANCTIONED PRIOR TO 01-04-2005, THE ASSESSEE IS NOT HIT BY THE DEFINITION OF THE BUILT UP ARE WHICH IS APPLICABLE TO THE PROJECT WHICH HAVE BEEN APPROV ED AFTER 01-04-2005. ALTERNATIVELY WE PLEADED THAT THE PROR ATA DEDUCTION MAY BE ALLOWED BY EXCLUDING THE AREA COVE RED UNDER THE AMENITIES SPACE. FOR THAT PROPOSITION HE RELIED ON THE FOLLOWING DECISION: A) M/S. G K ASSOCIATES VS. ITO (ITA NO. 1137/PN/2010) (PARA 7) B) M/S. ADITYA DEVELOPERS VS. DCIT (PUNE) (ITA NO. 791/PN/2008) (PARA 6 & 7) C) MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION CO. VS. DCIT (PUNE) (ITA NO. 822/PN/2011) (PARA 22 & 24 ) D) M/S. RAHUL CONSTRUCTION CO. VS. ITO (PUNE) (ITA NO. 1250 /PN/2009) (PARA 8 TO 10) E) RUNWAL MULTIHOUSING (P) LTD. VS. ACIT (PUNE) (ITA N O. 1015/PN/2011) (PARA 21.3) 3 F) DEVI CONSTRUCTION CO. VS. ACIT (PUNE) (ITA NO. 1390/PN/2010) (PARA 8) G) JAYANT M LUNAVAT VS. ACIT (PUNE) (ITA NO. 229/PN/2010) (PARA 5.2,5.4 & 5.5) 9. PER CONTRA THE LD. DR SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. WE FIND THAT THE ASSESSEES ORI GINAL LAY OUT AND BUILDING PLAN WAS SANCTIONED FOR FIRST TIME ON 14- 06-2004 I.E. BEFORE 31-03-2005 (PAGE 12 OF THE PAPE R BOOK). IT APPEARS THAT SUBSEQUENTLY THE ASSESSEE ACQUIRED SOME ADDITIONAL LAND AND THE ORIGINAL PLAN WAS REVISED AND IN THE SANCTIONED LAY OUT 15% SPACE OF THE TOTAL AREA IS R ESERVE FOR AMENITIES BUILDING. THE LD. COUNSEL POINTED OUT TH AT TILL TODAY NOT A SINGLE UNIT IN THE AMENITIES SPACE IS S OLD OUT. THE FURTHER ARGUMENT OF THE LD. COUNSEL IS THAT HOU SING PROJECT IS VERY BROUGHT TERM AND AMENITIES BUILDING ITSELF IS THE INDEPENDENT BUILDING. 10. LET US DEAL WITH THE ARGUMENT OF THE ASSESSEE G OING WITH THE CASE OF THE ASSESSING OFFICER THAT THE AME NITY BUILDING IS NOTHING BUT IT IS COMMERCIAL BUILDING O NLY AND PART OF THE ASSESSEES HOUSING PROJECT. IN THIS CA SE THE ASSESSEES ORIGINAL LAYOUT AND THE BUILDING PLAN WE RE SANCTIONED ON 14-06-2004 EVEN IF THE N.A. ORDER OF THE PLOT IS DATED 16-09-2003 (COPY OF THE PLAN PLACED AT PAG E NOS. 13 AND 14 OF THE COMPILATION). AS PER THE LAYOUT P LAN SANCTIONED ON 14-06-2004, THE TOTAL AREA OF THE PLO T IS SHOWN AT 4100 SQ. MTRS. AND AREA UNDER THE AMENITY SPACE 15% I.E. 615 SQ. MTRS. IT APPEARS THAT SUBSEQUENTL Y THE ASSESSEE SOUGHT THE REVISION IN THE SANCTIONED LAYO UT AND PLAN BUT THE AREA OF THE PLOT WAS 4100 SQ. MTRS. T ILL 01-04- 2005 THE ASSESSEE HAS NOT DONE ANYTHING ON THE PLOT . IT APPEARS THAT THE ASSESSEE ACQUIRED THE ADJOINING LA ND AND FILED THE FURTHER REVISED PLAN AND LAYOUT FOR THE A PPROVAL TO THE LOCAL AUTHORITY AND THE APPROVAL WAS GIVEN TO T HE SAID PLAN ON 05-08-2006. IN THE SAID LAYOUT THE TOTAL A REA OF THE PLOT IS SHOWN AT 8400 SQ. FT. (COPY OF THE PLAN AND LAYOUT IS AT PAGE NOS. 28 AND 30 OF COMPILATION). FROM THIS FACTUAL ASPECT, IT CAN SAFELY BE CONCLUDED THAT IN FACT THE PLAN SANCTIONED ON 05-08-2006 IS ALMOST A NEW PLAN AND I T WAS NOT MERELY THE REVISION OF THE EXISTING PLAN, EVEN THOUGH IN THE APPLICATION TO THE LOCAL AUTHORITY THE ASSESSEE HAS STATED REVISION OF THE PLAN AND LAYOUT. IN CONSEQU ENCE OF ACQUISITION OF THE ADDITIONAL LAND, THE AREA OF THE AMENITIES SPACE WAS ALSO INCREASED SO IT CANNOT BE SAID THAT THE PLAN SANCTIONED ON 05-08-2006 IS ONLY THE REVISED PLAN. WE ARE UNABLE TO ACCEPT THE ARGUMENT OF THE LD. COUNSEL TH AT AS THE PROJECT WAS SANCTIONED ON 16-06-2004, HENCE THE 4 DEFINITION OF THE BUILT UP AREA INTRODUCED IN SEC. 80IB(10) BY THE FINANCE (NO. 2) ACT, 2004 W.E.F. 01-04-2005 IS NOT APPLICABLE. AFTER ANXIOUSLY PERUSING THE DOCUMENTS ON RECORD, INCLUDING THE LAYOUT PLAN AND OTHER PERMISS IONS, IN OUR OPINION THE EFFECTIVE SANCTIONED TO THE ASSESSE ES HOUSING PROJECT IS ON 05-08-2006 AND HENCE, THE ASS ESSEE WAS VERY MUCH AWARE REGARDING THE CHANGE IN LAW AND HE COULD HAVE ALSO ACCORDINGLY MADE THE CHANGES IN THE PLAN AND LAYOUT. WE FIND NO MERIT ON THE FIRST ARGUMENT OF THE ASSESSEE IN RESPECT OF THE APPLICABILITY OF THE DEF INITION OF THE BUILT UP AREA INTRODUCED IN SEC. 80IB(10) W.E.F . 01-04- 2005. WE HOLD THAT AMENDMENT INTRODUCED TO SEC. 80IB(10), PUTTING, CEILING ON COMMERCIAL AREA IS AP PLICABLE TO THE ASSESSEES PROJECT. 11. NOW WE ADDRESS THE NEXT LIMB OF THE ARGUMENT OF THE LD. COUNSEL I.E. AMENITIES SPACE ITSELF IS A SEPARA TE PROJECT. WE FIND FORCE IN THE SAID CONTENTION OF THE ASSESSE E. AS PER THE INFORMATION ON RECORD, WE FIND THAT THE ASSESSE E WAS REQUIRED TO RESERVE 15% AREA OF HIS PLOT FOR AMENIT IES SPACE EVEN THOUGH THE LD. COUNSEL HAS TAKEN LOT OF EFFORT S TO CONVINCE THAT AMENITY BUILDING IS DIFFERENT THAN CO MMERCIAL BUILDING BUT WE PREFER NOT TO GO INTO THE SAID CONT ROVERSY. WE ARE EXAMINED THIS ISSUE ON THE DIFFERENT CONTENT ION OF THE ASSESSEE THAT AMENITIES SPACE FOR AMENITY BUILD ING IS A PROJECT ITSELF. ON THE PERUSAL OF THE LAYOUT AND P LAN, IT IS UNDISPUTED FACT ON RECORD THAT FROM THE FIRST APPRO VED LAYOUT, THE ASSESSEE HAS SHOWN 15% AREA RESERVE IN PLOT OF LAND AS AMENITIES SPACE. THE ARGUMENT OF THE LD. C OUNSEL IS THAT THE LOCAL AUTHORITY IN TERMS OF DC RULES AN D MAHARASHTRA REGIONAL TOWN PLANNING ACT, 1966 (IN SH ORT MRTP ACT) MANDATES THAT IF THE PLOT AREA IS MORE THAN 1 ACRE IN THE RESIDENTIAL ZONE THEN AMENITIES SPACE T O THE EXTENT OF 15% OF THE PLOT AREA SHALL HAVE TO BE PRO VIDED IN THE LAYOUT. THE LD. COUNSEL ALSO REFERRED TO SEC. 22 OF THE MRTP ACT, 1966 TO IMPRESS HIS ARGUMENT ON THE POINT THAT THE RESERVATION OF THE AMENITY SPACE IS GOVERNED BY THE RELEVANT STATUTE AND IS NOT THE MATTER OF CHOICE OF THE DEVELOPER. THE ASSESSEE HAS ALSO FILED THE COPY OF THE SANCTIONED PLAN OF THE AMENITY BUILDING ON THE RESE RVE SPACE OF 1230 SQ. MTRS. WHICH IS PLACE AT PAGE NO. 40 OF THE COMPILATION. WE FURTHER FIND THAT FOR THE CONSTRUC TION OF THE BUILDING OF THE AMENITY SPACE SEPARATE PERMISSI ON HAS BEEN GRANTED BY THE DISTRICT COLLECTOR BEING COMPET ENT LOCAL AUTHORITY VIDE ORDER DATED 07-06-2008. IF THE BUIL DING ON THE AMENITY SPACE HAS BEEN GRANTED SPECIFIC PERMISS ION SEPARATELY, IN OUR OPINION IT PARTAKE THE CHARACTER OF INDEPENDENT PROJECT AND CANNOT BE TAGGED WITH THE ASSESSEES OTHER PROJECTS. THE LD. COUNSEL ALSO SU BMITTED 5 THAT NOT A SINGLE UNIT IN THE SAID BUILDING HAS BEE N SOLD TILL TODAY EVEN THOUGH GIVEN ON LEASE AND NO PROFIT FROM THE AMENITY BUILDING SPACE IS INCLUDED IN THE ELIGIBLE PROFIT ON WHICH THE DEDUCTION U/S. 80IB(10) HAS BEEN CLAIMED. THE LD. COUNSEL HAS RELIED ON THE PLETHORA OF THE DECIS IONS ON THIS LIMB OF ARGUMENT BUT IN OUR OPINION THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. VANDANA PROPERTY 353 ITR 36 (BOM) IS APPLICABLE TO THE FACTS OF THIS CASE. WE, ACCORDINGLY, HOLD THAT THE AMENITY BUILDING IS AN INDEPENDENT PROJECT ITSELF AND IT CA NNOT BE TAGGED WITH OTHER PROJECTS OF THE ASSESSEE. WE, FU RTHER HOLD THAT THE ASSESSEE HAS NOT VIOLATED ANY OF THE CONDI TIONS OF SEC. 80IB(10) TO GAIN ELIGIBILITY FOR CLAIMING THE DEDUCTION AND HENCE BOTH THE AUTHORITIES BELOW ERRED BY DENYI NG THE DEDUCTION TO THE ASSESSEE. WE, ACCORDINGLY, ALLOW THE ASSESSEES CLAIM OF DEDUCTION ON THE ABOVE REASON A ND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S. 80IB(10). WE ALSO MAKE IT CLEAR THAT AS THE AMENIT Y BUILDING IS TREATED AS AN INDEPENDENT PROJECT, THE ASSESSEE IS NOT ENTITLED TO INCLUDE THE PROFIT EARNED FROM T HE SALE OF ANY OF THE UNIT IN THE SAID BUILDING FOR CLAIMING T HE DEDUCTION U/S. 80IB(10). 12. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . 2.1 NOTHING CONTRARY WAS BROUGHT ON BEHALF OF REVEN UE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE HOLD THAT THE AMENITY BUILDING IS AN INDEPENDENT PROJECT ITSELF A ND IT CANNOT BE TAGGED WITH OTHER PROJECTS OF THE ASSESSEE. THE AS SESSEE HAS NOT VIOLATED THE CONDITIONS OF SECTION 80IB(10) FOR CLA IMING THE DEDUCTION AND HENCE BOTH THE AUTHORITIES BELOW ERRE D BY DENYING THE DEDUCTION TO THE ASSESSEE. ACCORDINGLY, WE ALL OW THE ASSESSEES CLAIM OF DEDUCTION FOR THE REASONS INCOR PORATED IN A.Y. 2007-08. ACCORDINGLY, THE ASSESSING OFFICER IS DIR ECTED TO ALLOW THE DEDUCTION U/S.80IB(10) OF ACT. IT IS ALSO MAKE IT CLEAR THAT AS THE AMENITY BUILDING IS TREATED AS AN INDEPENDENT P ROJECT, THE ASSESSEE IS NOT ENTITLED TO INCLUDE THE PROFIT EARN ED FROM SALE OF ANY OF THE UNIT IN THE SAID BUILDING FOR CLAIMING T HE DEDUCTION U/S.80IB(10) OF ACT. 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED AS INDICATED ABOVE. 6 PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 18 TH OF FEBRUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 18 TH FEBRUARY, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE