DCIT, CHENNAI V. Akshaya Pvt Ltd., CHENNAI

ITA 2114/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8693 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Section: 143(3); 14A; 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2113 & 2114/MDS/2015 ( / ASSESSMENT YEAR: 2008-09 & 2010-11) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-I(1), CHENNAI - 34. VS M/S. AKSHAYA PVT.LTD. G SQUARE, 46, RAJIV GANDHI SALAI, KANDANCHAVADI, CHENNAI - 600 096. PAN: AAFCA1708D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. P.RADHAKRISHNAN, JCIT, /RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE /DATE OF HEARING : 20 TH JUNE, 2016 /DATE OF PRONOUNCEMENT : 24 TH AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE TWO APPEALS ARE FILED BY THE REVENUE AGGRIEV ED BY THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-1, CHENNAI BOTH DATED 14.08.20 15 IN ITA NOS.197 & 198/CIT(A)-1/2013-14 PASSED UNDER SE CTION 143(3) / R.W.S. 147 250(6) OF THE ACT FOR THE ASSES SMENT YEARS 2008-09 & 2010-11. SINCE THE APPEALS ARE RELATED T O THE SAME ASSESSEE AND ON IDENTICAL ISSUES, THEY ARE HEA RD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.2113 & 2114/MDS/2015 2. THE ASSESSEE HAS RAISED ELABORATE GROUNDS IN ITS APPEALS AND THEY ARE CONCISED HEREIN BELOW FOR ADJU DICATION:- ITA NO.2113/MDS/2015 (A.Y.2008-09): THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON PROPORTIONATE BASIS BECAUSE SOME OF THE UNITS EXCEED THE MAXIMUM BUILT UP AREA OF 1500 SQ.FT., AS STIPULATED UNDER SECTION 80IB(10) OF THE ACT. ITA NO.2114/MDS/2015 ( A.Y.2010-11): I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ON PROPORTIONATE BASIS BECAUSE SOME OF THE UNITS EXCEED THE MAXIMUM BUILT UP AREA OF 1500 SQ.FT., AS STIPULATED UNDER SECTION 80IB(10) OF THE ACT . II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER AMOUNTING TO ` 25,69,320/- BY INVOKING THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 3. BRIEF FACTS OF THE CASES ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPERS AND FLAT PROMOTERS FILED ITS RETU RNS OF 3 ITA NOS.2113 & 2114/MDS/2015 INCOME FOR THE ASSESSMENT YEARS 2008-09 & 2010-11 ADMITTING NIL INCOME AFTER CLAIMING DEDUCTION UNDE R SECTION 80IB OF THE ACT FOR RS.12,70,09,438/- AND ` 3,32,20,446/- RESPECTIVELY. FOR THE ASSESSMENT YEAR 2007-08 THE ASSESSMENT WAS REOPENED BY THE LEARNED ASSESSING OF FICER BY ISSUING NOTICE UNDER SECTION 147 WHICH WAS SERVE D ON THE ASSESSEE ON 29.03.2012 FOR THE REASON THAT DEDUCTIO N CLAIMED UNDER SECTION 80IB(10) WAS INCONSISTENT WIT H THE PROVISIONS OF LAW AND THIS FINDING IN THE SUBSEQUEN T ASSESSMENT YEAR HAS BEARING IN THE IMMEDIATELY PREC EDING YEARS BECAUSE ASSESSEE HAD MADE SIMILAR INELIGIBLE CLAIM. THEREAFTER THE ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3) R.W.S. 147 OF THE ACT ON 28.03.2013 FOR THE ASSESSMENT YEAR 2008-09 BY MAKING CERTAIN DISALLOWA NCES AMONGST WHICH ONE OF THE DISALLOWANCES WAS DENYING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE A CT AMOUNTING TO ` 12,70,09,438/-. FOR THE ASSESSMENT YEAR 2010-11 , THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 24. 08.2011 AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143( 3) OF THE ACT ON 28.03.2013, WHEREIN THE LEARNED ASSESSIN G OFFICER 4 ITA NOS.2113 & 2114/MDS/2015 MADE DISALLOWANCE UNDER SECTION 14A OF THE ACT AND 40A(2)(B) OF THE ACT AND FURTHER DENIED THE BENEFI T OF SECTION 80IB(10) OF THE ACT. ITA NO.2113/MDS/2015 (A.Y.2008-09): 4.1 FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE H AD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR RS. 13,43,95,948/- RESTRICTING IT TO THE AVAILABLE PROF IT OF RS.12,70,09,438/-. THE LEARNED ASSESSING OFFICER DE NIED THE BENEFIT OF SECTION 80IB(10) OF THE ACT TO THE ASSES SEE BECAUSE OF THE FOLLOWING REASONS:- I) ALL THE FLATS WERE HAVING BUILT UP AREA EXCEEDIN G 1500 SQ.FT., WHEN THE TERRACE AREA OF APPROXIMATELY 144 SQ.FT WAS TAKEN INTO CONSIDERATION. II) THE SUN SHADES HAVING PROJECTIONS OF APPROXIMAT ELY 5 TO 6 FEET WERE CONVERTED INTO WARDROBE WHEREBY TH E TOTAL BUILT UP AREA EXCEEDED THE LIMIT PRESCRIBED U NDER THE ACT. III) THE ASSESSEE HAS ONLY ACTED AS A CONTRACTOR FO R CONSTRUCTING THE RESIDENTIAL FLATS AND WAS NOT IN T HE PROMOTION OF THE PROJECT. 5 ITA NOS.2113 & 2114/MDS/2015 IV) THE UDS AREA WAS TRANSFERRED TO THE FLAT OWNERS AND THUS THE CONSTRUCTION OF RESIDENTIAL UNIT WAS ONLY AN INCIDENTAL ACTIVITY, PRECISELY THE PROJECT WAS NOT CONCEIVED AND DEVELOPED AS A WHOLE BY THE ASSESSEE COMPANY. 4.2 ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE, HOWEV ER WITH A RIDER THAT THE ASSESSEE WOULD BE ENTITLED TO CLAI M THE BENEFIT OF SECTION 80IB(10) ON PROPORTIONATE BASIS TO THE EXTENT THE FLATS PROMOTED BY THE ASSESSEE FALLS WIT HIN THE PRESCRIBED LIMIT OF 1500 SQ.FT., BY OBSERVING AS UN DER:- 5.1.1 NOW, ON THE SECOND LIMB OF THE ISSUE WITH RE GARD TO THE DISPUTE ON PLINTH AREA AND THE ELIGIBILITY TO D EDUCTION CLAIMED U/S 80IB(10), I FIND THAT ID.CIT(A) IN APPE LLANT'S OWN CASE FOR A Y. 2009-10 VIDE THE ORDER REFERRED ABOVE, ON SIMILAR ISSUE ALLOWED THE DEDUCTION U/S 801B(1 0 ) RELYING ON THE DECISION OF THE HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT V. SANGHVI & DOSHI ENTERPRISES (255 CTR 156). FURTHER, THE APPELLANT'S CASE IS SQU ARELY COVERED BY THE DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF VISWAS PROMOTERS P LTD V. ACIT (255 CTR 149 ), WHEREIN THE HONBLE HIGH COURT ALLOWED THE CLAIM OF THE ASSESSEE U/S 801B(1) ON A PROPORTIONATE BASIS I.E., THE CLAIM WAS TO BE ALLOWED TO THE EXTENT OF UNITS CONF IRMING TO THE LIMIT OF 1500 SFT . ACCORDINGLY, THE AO IS DIRE CTED TO ACCORD PROPORTIONATE ALLOWANCE OF DEDUCTION U/S 801 B(10) TO THE EXTENT OF ELIGIBLE UNITS. IN THE RESULT, THE GROUND NO.4 IS PARTLY ALLOWED. 6 ITA NOS.2113 & 2114/MDS/2015 4.3 BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIV E SUBMITTED THAT THE DECISION OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) IS IN ACCORDANCE WITH THE DECI SION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF VISWAS PROMOTERS PVT. LTD.VS.ACIT REPORTED IN 255 CTR 149 WHICH THIS BENCH OF THE TRIBUNAL HAS FOLLOWED I N THE ASSESSEES OWN CASE IN ITA NO. 1840/MDS/2014 FOR TH E ASSESSMENT YEAR 2009-10 VIDE ORDER DATED 19.06.2015 . 4.4 THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD N OT CONTROVERT TO THE SUBMISSION OF THE LEARNED AUTHORI ZED REPRESENTATIVE. 4.5 AFTER HEARING BOTH SIDES, WE DO NOT FIND ANY RE ASON TO INTERFERE WITH THE DECISION OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) BECAUSE THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ONLY FOLLOWED THE DECISION OF THE TRIBUNAL WHICH IN TURN HAD FOLLOWED THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VISWAS PRO MOTERS PVT.LTD., CITED SUPRA. THEREFORE, THIS GROUND RAISE D BY THE REVENUE IS DEVOID OF MERIT AND ACCORDINGLY DISMISSE D. 7 ITA NOS.2113 & 2114/MDS/2015 ITA NO.2114/MDS/2015 ( A.Y.2010-11): GROUND NO.1: 5. THE IDENTICAL ISSUE WITH RESPECT TO THE SAME PROJEC T IS DECIDED AGAINST THE REVENUE FOR THE ASSESSMENT YEAR 2008- 09 SUPRA. THEREFORE, FOLLOWING THE SAME, THE GROUND RAISED BY THE REVENUE IS DISMISSED. GROUND NO. (II) : DISALLOWANCE OF ` 25,69,320/- UNDER SECTION 40A(2) BEING THE EXCESS RENT OF PERUNGUDI PREMISES PAID TO M/S. AKSHAYA HOME: 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAD PAID A SUM OF RS.1,21,77,120/- AS RENT TO M/S. AKSHAYA HOMES @ RS.95/- PER SQ.FT., WHEREIN THE MANAGING DI RECTOR OF THE ASSESSEE COMPANY IS THE PROPRIETOR. IT WAS F URTHER OBSERVED THAT M/S. AKSHAYA HOMES HAS RENTED SIMILAR SPACE TO A THIRD PARTY VIZ., M/S.HOME SOLUTIONS RETAIL IN DIA PVT.LTD. @ RS.73/- PER SQ.FT. THEREFORE, INVOKING THE PROVI SIONS OF SECTION 40A(2)(B) OF THE ACT, THE LEARNED ASSESSING OFFICER DISALLOWED RS.25,69,320/- BEING THE PROPORTIONATE D IFFERENCE IN RENT OF RS.90/- PER SQ.FT AND RS.73/- PER SQ.FT. 8 ITA NOS.2113 & 2114/MDS/2015 7. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING THE ORDER OF HIS PREDECESSOR DA TED 31.03.2014 ALLOWED THE APPEAL OF THE ASSESSEE IN IT S FAVOUR. 8. IN THIS SITUATION ALSO, WE DO NOT FIND IT NECESS ARY TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) FOR THE RELEVANT ASSESSMENT YE AR ON THIS ISSUE BECAUSE IT APPEARS THAT THE REVENUE HAS ACCEPTED THE DECISION OF THE LD.CIT(A) ON THE EARLIER OCCASI ON AND HAS NOT PREFERRED AN APPEAL. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 24 TH AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.MOHAN A LANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 24 TH AUGUST, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF