Shriram Properties Limited, CHENNAI V. ITO, CHENNAI

ITA 2067/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58006 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R SIVARAMAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 2067/(MDS)/2011 ASSESSMENT YEAR: 2006-07 M/S. SHRIRAM PROPERTIES LTD., GREAMS DUGAR 4 TH & 5 TH FLOOR, NO.149, GREAMS ROAD, CHENNAI 600 006. VS. THE INCOME-TAX OFFICER, COMPANY WARD-VI(1), CHENNAI-34. PAN AAFCS 5801D (APPELLANT) (RESPONDENT) ITA NO. 2070/(MDS)/2011 ASSESSMENT YEAR: 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-VI(2), CHENNAI 34. VS. M/S. SHRIRAM PROPERTIES LTD., CHENNAI 600 006. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. SIVARAMAN, ADVOCATE DEPARTMENT BY : SHRI ASH OK KUMAR, IRS, COMMISSIONER OF INCOME-TAX DATE OF HEARING : 8 TH MARCH, 2012 DATE OF PRONOUNCEMENT : 8 TH MARCH, 2012 ITA 2067 & 2070/11 :- 2 -: O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE CROSS APPEALS RELATING TO THE ASSESSMENT YE AR 2006- 07 ARE FILED BY THE ASSESSEE AND THE REVENUE, RESPE CTIVELY. THE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME-TAX(APPEALS)-V AT CHENNAI DATED 30.09.2011 AND ARISE OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) OF TH E INCOME-TAX ACT, 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPE AL RELATE TO THE CLAIM MADE BY THE ASSESSEE FOR DEDUCTION AVAILA BLE UNDER SEC.80IB(10) WITH REFERENCE TO HOUSING PROJECTS. 3. THE RELEVANT GROUNDS ARE EXTRACTED BELOW : - THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE A PPELLANT HAS NOT DISPUTED OR AGITATED THE FINDINGS OF THE AS SESSING OFFICER THAT 48 FLATS OUT OF 62 FLATS IN RESPECT OF WHICH DEDUCTION U/S.80IB WAS CLAIMED EXCEEDED 1500 SQ.FT. HE HAS FAILED TO APPRECIATE THAT THE APPELLANT HAS RAI SED THIS POINT IN GROUND NOS.II(I) TO (IV). ITA 2067 & 2070/11 :- 3 -: 2. THE LEARNED CIT(A) HAS ERRED IN NOT DECIDING THE ISSUE OF EXCLUDING THE COMMON AREA IN CALCULATING BUILT UP A REA AS PER SEC.80IB(14)(A) OF THE ACT. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT THE COMMON AREA HAS TO BE EXCLUDED IN CALCULATING BUILT UP AREA AS PER SEC.80IB(14)(A) OF THE ACT. 4. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE A CTION OF THE ASSESSING OFFICER IN DISALLOWING DEDUCTION U/S. 80IB(10) IN RESPECT OF 48 FLATS WHICH ALLEGED EXCEEDS 1500 S Q.FT. AND REMITTING THE MATTER TO THE ASSESSING OFFICER IN RE SPECT OF THE REMAINING 14 FLATS ALONE FOR VERIFICATION ON TH E BASIS OF THE MANDATE OF APPELLATE TRIBUNAL IN THE CASE OF SA NGHVI & DOSHI ENTERPRISES. 5. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT 51 FL ATS OUT OF THE 62 FLATS ARE ELIGIBLE FOR DEDUCTION U/S.80IB (10), AS THEIR AREAS IS LESS THAN 1500 SQ.FT. EACH AFTER ELI MINATING THE COMMON AREA, AS MANDATED BY SEC.80IB(14)(A). ITA 2067 & 2070/11 :- 4 -: 4. WE HEARD SHRI R. SIVARAMAN, THE LEARNED AUTHOR IZED REPRESENTATIVE APPEARING FOR THE ASSESSEE AND SHRI ASHOK KUMAR, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FO R THE REVENUE. 5. IT HAS BEEN HELD IN THE CASE OF SANGHVI & DOSH I ENTERPRISE V. ITO (131 ITD 151(CHENNAI) (TM) THAT THE ASSESSEE WHO HAS CONSTRUCTED A COMPOSITE HOUSING COMPLEX CONSISTING OF ELIGIBLE AND NON-ELIGIBLE FLATS ON THE BASIS OF THE EXTENT OF AR EA, IS ENTITLED FOR DEDUCTION UNDER SEC.80IB(10) ON THOSE FLATS COMING WITHIN THE LIMIT OF EXTENT PRESCRIBED IN THE ACT AND THOSE FLATS IN EXCESS OF PRESCRIBED EXTENT OF AREA ALONE CAN BE KEPT OUTSIDE THE PURVIEW OF DEDUCTION IN SEC.80IB(10). THE SAID THIRD MEMBER D ECISION, FOLLOWING THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. BENGAL AMBUJA HOUSING DEVELOPMENT LT D. HELD THAT THE ASSESSEE WAS ENTITLED FOR PROPORTIONATE DEDUCTI ON UNDER SEC.80IB(10) IN RESPECT OF FLATS HAVING BUILT UP AR EA NOT EXCEEDING 1500 SQ.FT. AND NOT ENTITLED FOR DEDUCTION IN RESPE CT OF THOSE FLATS HAVING THEIR BUILT UP AREA EXCEEDING 1500 SQ.FT. T HEREFORE, THE CLAIM OF THE ASSESSEE HAS TO BE EXAMINED IN THE LIGHT OF THE PROPOSITION LAID DOWN BY THE ABOVE SAID THIRD MEMBER DECISION. ITA 2067 & 2070/11 :- 5 -: 6. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS RIGHTLY FOLLOWED THE PROPOSITIONS LAID DOWN IN THE ABOVE SA ID THIRD MEMBER DECISION AND ADJUDICATED THE ISSUE. BUT, AS REFLEC TED IN THE GROUNDS RAISED BY THE ASSESSEE, THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS NOT ADJUDICATED THE GROUNDS RAISED BY THE ASSES SEE REGARDING THE EXACT NUMBER OF FLATS ENTITLED FOR DEDUCTION AN D EXACT NUMBER OF FLATS NOT ENTITLED FOR DEDUCTION. WHILE BIFURCATIN G ELIGIBLE AND NON- ELIGIBLE FLATS, THE COMMISSIONER OF INCOME-TAX(APPE ALS) OUGHT TO HAVE EXCLUDED THE COMMON AREA PROVIDED IN THE BUILD ING COMPLEX. THEREFORE, WE FIND EVEN IF THE COMMISSIONER OF INCO ME-TAX(APPEALS) HAS FOLLOWED THE PROPOSITIONS LAID DOWN IN THE ABOV E SAID THIRD MEMBER CASE, QUANTIFICATION OF ELIGIBLE UNITS HAD N OT BEEN PROPERLY ADJUDICATED. THE LEGAL ISSUE OF EXCLUDING THE COMM ON AREA WAS ALSO OVERLOOKED. THEREFORE, THE FILE HAS TO BE SEN T BACK TO THE COMMISSIONER OF INCOME-TAX(APPEALS) FOR EXAMINING T HE ABOVE FACTUAL MATTERS. 7. ANOTHER GROUND RAISED BY THE ASSESSEE IS TH AT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN NO T ADJUDICATING THE ISSUE OF ADDITIONS OF FBT AND DIVIDEND TAX IN C OMPUTING THE ITA 2067 & 2070/11 :- 6 -: INCOME UNDER SEC.115JB. THESE ISSUES ALSO HAVE TO BE ADJUDICATED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IN THE L IGHT OF THE ARGUMENTS OF THE ASSESSEE THAT THE ABOVE AMOUNTS CA NNOT BE ADDED BACK TO ARRIVE AT TAXABLE BOOK PROFIT. 8. THEREFORE, AS FAR AS THE ISSUES RAISED BY TH E ASSESSEE ARE CONCERNED, THEY ARE REMITTED BACK TO THE COMMISSION ER OF INCOME- TAX(APPEALS) FOR ADJUDICATION IN ACCORDANCE WITH LA W. 9. THE GROUNDS RAISED IN THE CROSS APPEAL FILED BY THE REVENUE READ AS BELOW : 2.1 THE LEARNED CIT(A) ERRED IN DIRECTING THE ASS ESSING OFFICER TO GIVE PROPORTIONATE ALLOWANCE OF CLAIM U/ S. 80IB. 2.2 THE LEARNED CIT(A) FAILED TO NOTE THAT THERE IS NO QUESTION OF PROPORTIONATE ALLOWANCE OF CLAIM U/S.80 IB AND IF THE CONDITIONS AS STIPULATED U/S.80IB(10) ARE NOT S ATISFIED, NO DEDUCTION CAN BE ALLOWED U/S.80IB OF THE INCOME- TAX ACT. 2.3 THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT W HEN THE LAW DID NOT PERMIT BUILT UP AREA OF EACH DWELLING U NIT EXCEEDING 1500 SQ.FT. U/S.80IB, THE SAME CANNOT BE ITA 2067 & 2070/11 :- 7 -: INFERRED EITHER. THIS RESTRICTION IS APPLICABLE TO THE ENTIRE PROJECT. 2.4 IT IS SUBMITTED THAT, THE DECISION OF THE IT AT IN THE CASE OF SANGHVI & DOSHI HAS NOT BEEN ACCEPTED BY TH E DEPARTMENT AND FURTHER APPEAL TO HIGH COURT HAVE BE EN PREFERRED BY THE DEPARTMENT. 2.5 IT IS SUBMITTED THAT, HAVING REGARD TO THE DECISION OF THE ITAT, CHENNAI BENCH IN THE CASE OF VISWAS PROMO TORS P. LTD. (126 ITR 263), THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 10. THE GROUNDS RAISED BY THE REVENUE ARE LIABLE TO BE REJECTED IN VIEW OF THE THIRD MEMBER DECISION IN THE CASE O F SANGHVI & DOSHI ENTERPRISE, WHICH HAS ALREADY BEEN EXPLAINED IN PARAGRAPHS ABOVE. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS RIGHTLY FOLLOWED THE ABOVE SAID DECISION BINDING ON HIM. T HE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. 11. IN RESULT, THE APPEAL FILED BY THE ASSESSE E IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APP EAL FILED BY THE REVENUE IS DISMISSED. ITA 2067 & 2070/11 :- 8 -: ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 8 TH OF MARCH, 2012 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 8 TH MARCH, 2012. MPO* COPY TO: (1) PETITIONE R (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.