M/s. Paradise Construction, Pune V. ITO, Ward 4(5), Pune

ITA 2133/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6704 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M S VERMA
• Keywords: Reopening of assessment
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2133/PN/2012 (ASSESSMENT YEAR 2006-07) M/S. PARADISE CONSTRUCTION, 21, GULMOHAR APARTMENT, 2420, EAST STREET, CAMP, PUNE 411 001 PAN NO.AAHFP3703C .. APPELLANT VS. DY.CIT, CIRCLE-4, PUNE .. RESPONDENT ASSESSEE BY : SHRI SUHAS P. BORA REVENUE BY : MS. M.S. VERMA DATE OF HEARING : 12-06-2014 DATE OF PRONOUNCEMENT : 13-06-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 02-07-2012 OF THE CIT(A)-II, PUNE RELATING TO THE A SSESSMENT YEAR 2006- 07. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE THEY ALL RELATE TO DISALLOWANCE OF CLAIM OF DEDUCTI ON U/S.80IB(10) AMOUNTING TO RS.2,38,72,190/- BY THE ASSESSING OFFI CER AND UPHELD BY THE CIT(A). 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROMOTER, BUILDERS AND D EVELOPERS. IT FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT NIL AFTE R CLAIMING DEDUCTION U/S.80IB(10) AT RS.2,38,72,191/-. ASSESSMENT U/S.1 43(3) WAS COMPLETED 2 ON 18-12-2008 ASSESSING TOTAL INCOME AT NIL. SUBSE QUENTLY, THE ASSESSING OFFICER NOTED THAT DURING A.Y. 2007-08 CL AIM OF DEDUCTION U/S.80IB(10) MADE BY THE ASSESSEE WAS DENIED SINCE THE ASSESSEE FAILED TO COMPLETE THE PROJECT WITHIN 4 YEARS (I.E. 31-03-200 9) FROM THE DATE OF APPROVAL GRANTED BY THE LOCAL AUTHORITY ( I.E. 28-0 4-2004). THEREFORE, HE WAS OF THE OPINION THAT THE CLAIM OF DEDUCTION U/S. 80IB(10) GRANTED TO THE ASSESSEE NEEDS TO BE WITHDRAWN. HE, THEREFORE, ISS UED NOTICE U/S.148 OF THE I.T. ACT. 4. THE ASSESSEE OBJECTED TO SUCH RE-OPENING OF ASSE SSMENT. HOWEVER, THE ASSESSING OFFICER REJECTED SUCH OBJECTIONS. FO LLOWING HIS ORDER FOR A.YRS. 2007-08 AND 2008-09, THE ASSESSING OFFICER D ISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) MADE BY THE ASSESSEE AMOU NTING TO RS.2,38,72,191/-. IN APPEAL THE LD.CIT(A) FOLLOWIN G THE ORDER OF HIS PREDECESSOR FOR A.Y. 2007-08 DISMISSED THE APPEAL F ILED BY THE ASSESSEE. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER ON FACT AND IN LAW:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL-II) , PUNE HAS ERRED IN CONCLUDING THAT THE REOPENING OF ASSESSMENT IS VALID WITHOUT APPRECIATING THE FACTS SUBMITTED BY THE ASSESSEE THAT THE REOPENING I N BASED ON CHANGE IN OPINION ONLY AND ALSO WITHOUT ANY ADDITIONAL EVIDEN CE ON RECORD AS THE COMPLETION CERTIFICATE RECEIVED LAST ON 15.12.2008 WAS SUBMITTED TO THE ASSESSING OFFICER BEFORE COMPLETING THE ASSESSMENT FOR A Y 2007-08. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL-I I), PUNE HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S 80 IB OF INCOME TAX 1961 AMOUNTING TO RS. 2,38,72,190/- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL-I I), PUNE HAS ERRED IN CONFIRMING THE DISALLOWANCE BY WRONGLY INTERPRETING THE PROVISIONS OF SECTION 80 IB (10) (A) AND PROVISIONS OF SECTION 80IB (10) EX PLANATION LAND 2 OF INCOME TAX ACT, 1961. 3 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL-I I), PUNE HAS ERRED IN INTERPRETING THE PROVISIONS OF RULES FRAMED BY THE LOC AL AUTHORITY AND HAS NOT ACCEPTED THE FACT SUBMITTED BY ASSESSEE THAT ALL THE CONSTRUCTION ALLOWED AS PER PLAN LAST SANCTIONED IS COMPLETED BY THE ASSESSEE F IRM . 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL - II), PUNE HAS FURTHER ERRED IN INTERPRETING THE PROVISIONS PERTAINING TO COMPLETION OF PROJECT AND PERTAINING TO FINAL COMPLETION CERTIFICATE TO BE IS SUE BY THE LOCAL AUTHORITY AND THEREBY DENYING THE DEDUCTION TO THE ASSESSEE. 6. WITHOUT PREJUDICE TO ABOVE THE LEARNED COMMISSI ONER OF INCOME TAX (APPEAL-II), PUNE HAS ERRED IN REJECTING THE DEDUCTI ON ON PRO RATA BASIS WITH REFERENCE TO THE AREA OF 126 FLATS CONSTRUCTED BEFOR E THE SPECIFIED DATE. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL - II), PUNE HAS FURTHER ERRED IN PASSING ORDER OF APPEAL WITHOUT GIVING OPP ORTUNITY OF BEING HEARD AND FURTHER ERRED IN PASSING ORDER OF DISALLOWING DEDU CTION CLAIMED UNDER SECTION 80IB(10) BY TAKING THE SAME VIEW TAKEN BY HIS PREDECESSOR WITHOUT APPRECIATING FACTS AND LATEST COURT DECISIONS IN TH E MATTER. 8. THE LEARNED COMMISSIONER OF INCOME TAX IS ERRE D IN REJECTING THE CLAIM OF 80 IB (10) OF INCOME TAX ACT, 1961 WITHOUT APPRECIA TING FACTUAL POSITION OF THE CASE, APPLICABLE D. C. RULES, LOCAL AUTHORITY RUL ES, LEGAL POSITION AND CLARIFICATION ABOUT THE PROJECT. 9. THE APPELLANT PRAYS FOR ADMISSION OF ADDITIONA L GROUNDS. 10. THE APPELLANT CRAVES TO ADD, ALTER, AMEND ANY O F THE GROUND OR GROUNDS OF APPEAL. 6. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSESS ING OFFICER FOLLOWING HIS ORDER FOR A.YRS. 2007-08 AND 2008-09 DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) WHICH HAS BEEN UPHELD BY THE CIT(A). WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NOS.23 3/PN/2011 & 346/PN/2012 ORDER DATED 26-06-2013 FOR A.YRS. 2007- 08 AND 2008-09 HAS ALLOWED THE CLAIM OF SUCH DEDUCTION U/S.80IB(10) BY OBSERVING AS UNDER : 9. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROMOTERS, BUILDERS AND DEVELOPERS. THE ASSESSEE HAD CONST RUCTED A PROJECT UNDER THE NAME OF GULMOHAR PARADISE HOME, KH ARADI. THIS PROJECT INITIALLY COMPRISED OF 80 FLATS AS PER COMMENCEMENT CE RTIFICATE ISSUED BY THE PMC ON 28.04.2004. SUBSEQUENTLY, 46 MORE FLATS WERE ADDED IN SECOND BUILDING BY REVISED SANCTION PLAN IN 2005. IT IS UNDISPUTED THAT THE ASSESSEE RECEIVED OCCUPATION/COMPLETION CERTIFICATE FOR 126 FLATS FROM PMC AS FOLLOWS: CERTIFICATE PART-I DT. 13.02.2006 FOR 80 FLATS IN BUILDINGS A & B. CERTIFICATE PART-II DT. 06.05.2008 FOR 40 F LATS IN BUILDING D. CERTIFICATE PART-III DT. 15.12.2008 FOR 40 FL ATS IN BUILDING C. 4 10. ACCORDING TO THE ASSESSING OFFICER, THE FINAL COMPL ETION/OCCUPATION CERTIFICATE FOR PROJECT WAS NOT ISSUED BY PMC AND AS PE R BUILDING BY-LAWS ASSESSEE WAS REQUIRED TO HANDOVER 15% OF THE AREA TO PMC FOR AMENITIES. IN FACT, ASSESSEES INITIAL PROJECT WAS FOR 126 FLATS FOR WHICH COMPLETION CERTIFICATE WAS RECEIVED BY THE ASSESSEE ON 15.12.2008, I.E., BEFORE DUE DATE OF COMPLETION I.E., 31.03.2009. IN ACCORDANCE WITH THE REVISED PLAN UPTO 25.05.2005, 126 FLATS COMPRISED 40 FLATS EACH IN BUILDINGS A, B AND D AND 6 FLATS WERE RAISED IN BUILDING C. THUS, TH E ASSESSEE GOT COMPLETION CERTIFICATE WITH REGARDS TO 126 FLATS BEFO RE STIPULATED TIME PRESCRIBED U/S.80IB(10) I.E., 31.03.2009. SUBSEQUENT TO THIS, IN LIEU OF 15% OF AMENITIES AREA, I.E., 1200 SQ.MTRS., ADDITIONAL FSI AMOUNTING TO SALEABLE AREA OF 18,700 SQ.FT. WAS SANCTIONED BY PMC VI DE COMMENCEMENT CERTIFICATE DATED 10.06.2009 WHICH WAS SUBSEQUENT TO D ATE OF 31.03.2009, WHICH WAS TIME LIMIT FOR COMPLETION OF THE PROJECT H AVING 126 FLATS. THE ADDITIONAL FSI WAS UTILISED BY CONSTRUCTING 30 ADDITIO NAL FLATS IN BUILDING C. AS PER CLARIFICATION ISSUED ON BEHALF OF CBDT DA TED 04.05.2001, THE ADDITIONAL HOUSING PROJECT ON EXISTING HOUSING PROJECT SITE COULD QUALIFY AS INFRASTRUCTURE FACILITY UNDER THE PROVISIONS OF SECTIO N 80IB(10) PROVIDED IT IS UNDERTAKEN BY SEPARATE UNDERTAKING HAVING SEPARATE BOOKS OF ACCOUNTS SO AS TO ENSURE THAT CORRECT PROFIT COULD BE ASCERTAINE D FOR PURPOSE OF SECTION 80IB(10). DEDUCTION U/S. 80IB(10) IS GRANTED VIS-A-VIS PROJECT AND CORRECT PROFITS ARE ASCERTAINABLE WITH REGARDS TO PROF ITS FROM ADDITIONAL PROJECT. BUT HERE IN CASE BEFORE US, IT IS NOT THE CA SE OF ASSESSEE BECAUSE ASSESSEE HAS NOT CLAIMED DEDUCTION U/S. 80IB(10) WITH RE GARD TO ADDITIONAL FLATS RAISED IN BUILDING C AT THE STRENGT H OF ADDITIONAL FSI IN LIEU OF SURRENDER OF 15% OF AMENITIES AREA TO PMC. TAKING THE SPIRIT OF CLARIFICATION OF CBDT LETTER DATED 04.05.2001, IT I S CLEAR THAT ADDITIONAL CONSTRUCTION AT THE STRENGTH OF TDR QUALIFY FOR CLAIM OF DEDUCTION IN ITS OWN FACTS AND CIRCUMSTANCES. SAME REASONING APPLY FOR ADDITIONAL FSI RECEIVED IN LIEU OF SURRENDER OF 15% OF AMENITIES ARE A BY THE ASSESSEE. SO THE CONSTRUCTION AT THE STRENGTH OF ADDITIONAL FSI SHO ULD BE TAKEN SEPARATE FOR PURPOSE OF CLAIMING DEDUCTION U/S.80IB(10). HAVI NG SAID SO, IT IS CLEAR THAT CONSTRUCTION OF INITIAL 126 FLATS AS MENTIONED AB OVE SHOULD NOT BE LINKED WITH ADDITIONAL 30 FLATS COMPLETED SUBSEQUENT T O 31.03.2009. HAD THE ASSESSEE BEEN ELIGIBLE FOR DEDUCTION U/S.80IB(10) EV EN SUBSEQUENT TO 31.03.2009, HIS CLAIM WOULD HAVE BEEN ENTITLED FOR W ITH REGARDS TO 30 FLATS AS WELL. BUT THERE IS NO CLAIM OF 30 FLATS WITH REGA RD TO DEDUCTION U/S.80IB(10). BUT CLAIM OR NO CLAIM OF 30 FLATS RAISE D AT THE STRENGTH OF ADDITIONAL FSI WILL NOT DISTURB THE ENTITLEMENT OF 1 26 FLATS RAISED ON BUILDINGS A (40 FLATS), B (40 FLATS) , C (6 FLA TS) AND D (40 FLATS), WHICH WERE COMPLETED IN ALL RESPECTS ON 15.12.2008, I.E., B EFORE 31.03.2009. THE BENEFICIAL PROVISIONS OF SECTION 80IB(10) SHOULD NOT BE DILUTED BY NARROW UNTENABLE INTERPRETATION BY THE REVENUE AUTHORITIES. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR CLAIMING DEDUCTION U/S. 80IB(10) IN RESPECT OF 126 FLATS COMPLETED BEFORE 31-3-2009 AS DISCUSSED ABO VE. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. SIMILAR ISSUE AROSE IN A.Y. 2008- 09. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, T HE CLAIM OF DEDUCTION U/S.80IB(10) IS DIRECTED TO BE ALLOWED. 6.1 SINCE THE ASSESSING OFFICER WHILE DISALLOWING T HE CLAIM OF DEDUCTION U/S.80IB(10) HAS RELIED UPON THE ORDER OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR A.YRS. 2007-08 AND 2008-09 AND SINCE THE CIT(A) WHILE UPHOLDING SUCH DISALLOWANCE HAS RELIED ON THE ORDER FOR 5 A.Y. 2007-08 AND SINCE THE TRIBUNAL HAS ALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) IN ASSESSEES OWN CASE FOR A.YRS. 2007 -08 AND 2008-09, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BR OUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) FOR THE IMPUGNED ASSESSMENT YEAR. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSE SSEE ARE ACCORDINGLY ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 13-06-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PAN DA) JUDICIAL MEMBER ACCOUNTAN T MEMBER PUNE DATED: 13 TH JUNE, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE