BHUMIRAJ HOMES LTD., NAVI MUMBAI V. DY.CIT RG.10(3), MUMBAI

ITA 2170/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7941 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 08-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARESH KUMAR BALODIA
• Keywords: Principle of natural justice; Competent authority; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVA N, JM ITA NO.2170/MUM/2009 : ASST.YEAR 2004-2005 M/S.BHUMIRAJ HOMES LIMITED D/5-6 BIG SPLASH, SECTOR 17 VASHI, NAVI MUMBAI 400 703. PAN : AABCB6735H. VS. THE DY.COMMISSIONER OF INCOME-TAX RANGE 10(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRADIP KAPASI RESPONDENT BY : SHRI NARESH KUMAR BALODIA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 23.01.2009 IN RELATION TO ASSESSMENT YEAR 2004-2005 . IT IS A RECALLED MATTER INASMUCH AS THE EARLIER EX PARTE ORDER PASSED BY THE TRIBUNAL WAS RECALLED VIDE ITS LATER ORDER DATED 31.5.2010 IN MA NO.07/MUM/2010. 2. SECOND GROUND RAISED IN THIS APPEAL IS AGAINST T HE CONFIRMATION OF DISALLOWANCE OF DEDUCTION OF RS.2,55,56,221 CLAIMED BY THE ASSESSEE U/S.80IB(10) OF THE ACT. BRIEFLY STATED THE FACTS OF THE CASE AR E THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S.143(3) DISALLOWING DEDUCTION U/S.80IB(10) TO THE TUNE OF RS.31,70,650 OUT OF THE TOTAL DEDUCTION CLAIMED AT RS.2,55,56,221. THUS DEDUCTION WAS ALLOWED U/S.80IB(10) TO THE EXTENT OF RS.2,23,8 5,571. THE ASSESSING OFFICER ISSUED NOTICE U/S.148 ON THE GROUND THAT THE ASSESS EE HAD CLAIMED EXCESS DEDUCTION U/S.80IB(10). THE REASONS RECORDED BY THE ASSESSING OFFICER, COPY OF WHICH IS AVAILABLE AT PAGE 34 OF THE PAPER BOOK, INDICATE TH AT THE ASSESSEE WAS ALLOWED DEDUCTION UNDER THIS SECTION ON THE TOTAL RESIDENTI AL AREA OF 97162 SQ.FT. AS AGAINST DISALLOWANCE OF DEDUCTION IN THE ORIGINAL ASSESSMEN T ON COMMERCIAL AREA AT 11414 ITA NO.2170/MUM/2009 M/S.BHUMIRAJ HOMES LIMITED. 2 SQ.FT. SINCE THE PROVISIONS OF SECTION 80IB(10) WER E APPLICABLE ONLY WHEN THE PROJECT IS APPROVED AS HOUSING PROJECT AND IN THE ASSESSEES CASE IT WAS RESIDENTIAL AS WELL AS COMMERCIAL PROJECT APPROVE D BY THE NAVI MUMBAI MUNICIPAL CORPORATION, THE ASSESSING OFFICER OPINED THAT THE PROPORTIONATE DEDUCTION ALLOWED TO THE ASSESSEE TO THE EXTENT OF RESIDENTIAL UNITS CONSTRUCTED BY IT IN THE BUILDING PROJECT, WAS ALSO NOT ELIGIBLE. I N THE ASSESSMENT ORDER PASSED, THE A.O. ALSO EXAMINED THAT THE TOTAL SALEABLE AREA OF THE PROJECT WAS FOR 108576 SQ.FT. AND THE COMMERCIAL AREA AT 11414 SQ.FT. WAS 10.51% OF THE TOTAL SALEABLE AREA OF THE PROJECT. CONSIDERING ALL THESE FACTS THE ASSESSING OFFICER DENIED THE REMAINING AMOUNT OF DEDUCTION U/S.80IB(10). NO RELIEF WAS ALL OWED IN THE FIRST APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT IN THE ORIGINAL ASSESSME NT DEDUCTION U/S.80IB(10) WAS DISALLOWED TO THE EXTENT IT WAS RELATABLE TO PROFIT S OF COMMERCIAL AREA. HOWEVER IN THE INSTANT PROCEEDINGS U/S 147, THE ASSESSING OFF ICER DENIED THE REMAINING PART OF THE DEDUCTION WHICH WAS EARLIER ALLOWED AS IN HIS O PINION ONLY THE PROJECTS APPROVED AS `HOUSING PROJECTS WERE ELIGIBLE AND NO T THOSE APPROVED AS RESIDENTIAL AS WELL AS COMMERCIAL PROJECT BY THE LOCAL AUTHORI TY, WHICH IN THIS CASE IS NAVI MUMBAI MUNICIPAL CORPORATION. 4. IT WOULD BE RELEVANT TO NOTE THAT THE SPE CIAL BENCH OF THE TRIBUNAL IN BRAHMA ASSOCIATES VS. JCIT [(2009) 119 ITD 255 (PUN E) (SB)] HELD THAT DEDUCTION U/S.80IB(10) AS APPLICABLE PRIOR TO 1 ST APRIL, 2005 IS ADMISSIBLE IN CASE OF A HOUSING PROJECT COMPRISING RESIDENTIAL UNITS AND COMMERCIAL ESTABLISHMENTS IF IT IS APPROVED AS A HOUSING PROJECT BY THE LOCAL AUTHORITY OR WHER E 90% OR MORE OF THE TOTAL BUILT UP AREA IS USED FOR DWELLING UNIT. THIS SPECIAL BEN CH ORDER CAME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT IN CIT VS. BRAHMA ASSOCIATES IN INCOME TAX APPEAL NO.1194 OF 2010. WHILE ITS REC ENT JUDGEMENT, ITA NO.2170/MUM/2009 M/S.BHUMIRAJ HOMES LIMITED. 3 COPY OF WHICH HAS BEEN PLACED ON RECORD BY THE LEAR NED A.R., IT HAS BEEN HELD THAT UP TO 31.03.2005 DEDUCTION U/S.80IB(10) IS ELIGIBLE TO HOUSING PROJECTS APPROVED BY LOCAL AUTHORITY HAVING RESIDENTIAL UNITS WITH CO MMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DC RULES / REGULATIONS FRAMED B Y THE RESPECTIVE LOCAL AUTHORITIES SUBJECT TO THE FULFILLMENT OF OTHER CON DITIONS. IT HAS ALSO BEEN HELD THAT IN SUCH A SITUATION DEDUCTION HAS TO BE ALLOWED IRR ESPECTIVE OF THE FACT THAT THE PROJECT IS APPROVED AS HOUSING PROJECT OR RESIDE NTIAL PLUS COMMERCIAL. STILL FURTHER IT HAS BEEN LAID DOWN THAT IF THE ABOVE CON DITIONS ARE FULFILLED DEDUCTION U/S.80IB(10) HAS TO BE ALLOWED IRRESPECTIVE OF THE FACT WHETHER OR NOT THE COMMERCIAL AREA IS UP TO 10% OF THE TOTAL BUILT UP AREA OF THE PLOT. 5. ADVERTING TO THE FACTS OF THE INSTANT C ASE IT IS NOTED THAT THE INSTANT PROJECT HAS BEEN APPROVED BY THE NAVI MUMBAI MUNICIPAL CORP ORATION AS `RESIDENTIAL PLUS COMMERCIAL PROJECT. FROM THE COPY OF THE COMMENCE MENT CERTIFICATE OF THE PROJECT, AVAILABLE IN THE PAPER BOOK, IT IS SEEN T HAT PERMISSION WAS GRANTED BY THE AUTHORITY FOR TOTAL RESIDENTIAL BUILT UP AREA AT 59 42.558 M2 PLUS COMMERCIAL AREA AT 387.3990 M2 TOTALING 6310.357 M2. PAGE 20 OF THE PA PER BOOK IS CERTIFICATE OF ARCHITECT M/S.ANIL DOSHI & ASSOCIATES CERTIFYING TO TAL CARPET AREA OF 7070.743 SQ.MTR. WITH RESIDENTIAL CARPET AREA OF 5635.490 SQ .MTR., COMMERCIAL CARPET AREA OF 625.600 SQ.MTR. ALONG WITH STAIRCASE, LIFT AREA AND LIFT ROOM HAVING CARPET AREA OF 809.653 SQ.MTR. IN TOTAL. PERCENTAGE OF COMMERCIAL BUILT UP AREA TO THE TOTAL BUILT UP AREA IN THIS CASE, THUS COMES TO 8.8%. GOING BY THE AFORENOTED SPECIAL BENCH ORDER IN BRAHMA ASSOCIATES (SUPRA), THE ASSESSEE BECOMES ENTITLED TO DEDUCTION. 6. THE AO HAS CALCULATED THE PERCENTAGE OF COMMERCIAL AREA TO THE TOTAL AREA AT 10.51%, WHICH IS OTHERWISE NOT CORRECT, AS EVEN ACCEPTED BY THE LD. DR. EVEN IF WE DO NOT ENTER INTO THE ARENA OF CALCULATION OF THE PERCENTAGE OF COMMERCIAL ITA NO.2170/MUM/2009 M/S.BHUMIRAJ HOMES LIMITED. 4 AREA VIS--VIS TOTAL BUILT UP AREA, THE ASSESSEE D ESERVES TO SUCCEED ON THE BASIS OF THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH CO URT AS THE PROJECT HAS BEEN APPROVED BY THE NAVI MUMBAI MUNICIPAL CORPORATION A ND IT IS NOBODYS CASE THAT THE RESIDENTIAL UNITS WITH COMMERCIAL USER ARE NOT TO THE EXTENT PERMITTED UNDER THE DC RULES / REGULATIONS. IF THAT BE THE POSITION THE ASSESSEE BECOMES ENTITLED TO DEDUCTION UNDER THIS SECTION FOR THE ENTIRE AMOUNT OF DEDUCTION. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED R ELIANCE ON THE ORDER PASSED BY THE KOLKATA BENCH OF THE TRIBUNAL IN BENGAL ABUJ A HOUSING DEVELOPMENT LTD. VS. DCIT ITA NO.1595/KOL/2005 DATED 24.03.2006 BY C ONTENDING THAT THE SECOND CONDITION FOR ALLOWABILITY OF DEDUCTION U/S.80IB(10 ) AS PROVIDED UNDER CLAUSE (B), WAS NOT SATISFIED BY THE ASSESSEE. HE STATED THAT AS PER CLAUSE (B), THE PROJECT SHOULD BE ON THE SIZE OF A PLOT OF LAND WHICH HAS A MINIMUM AREA OF ONE ACRE. REFERRING TO PAGE 19 OF THE PAPER BOOK, BEING CER TIFICATE ISSUED BY THE ARCHITECTS OF THE ASSESSEE CERTIFYING TOTAL PLOT AREA OF THE L AND IN QUESTION IS 4300 SQ.MTR. HOWEVER, WHILE REFERRING TO PAGE 20 OF THE PAPER BO OK, WHICH IS CERTIFICATE ISSUED BY THE ASSESSEES ARCHITECT SHOWING TOTAL BUILT UP AREA 7070.743 SQ.MTR. AND COMMERCIAL AREA OF 625.600 SQ.MTR., THE LEARNED DEP ARTMENTAL REPRESENTATIVE CONTENDED THAT THOUGH PERCENTAGE OF 625 TO 7070 WAS 8.8% BUT THAT WAS NOT THE END OF THE MATTER. HE OPINED THAT THE BUILT UP AREA COV ERED BY STAIRCASE AND PASSAGE, LIFT AREA AND LIFT ROOM SHOULD ALSO BE APPORTIONED BETWE EN RESIDENTIAL AND COMMERCIAL IN THE RATIO OF 5635 : 625. HE FURTHER ADMITTED TH AT ONE ACRE IS EQUAL TO 4046.8 SQ.MTR. TAKING HIS CONTENTION FURTHER HE STATED T HAT ALTHOUGH THE PLOT AREA WAS MORE THAN THAT, BEING 4300 SQ.MTR. IN THE PRESENT CASE, BUT THE UNBUILT UP AREA WAS ALSO TO BE BIFURCATED IN PROPORTION TO COMMERCIAL A S WELL AS RESIDENTIAL BUILT UP AREA. IF THAT IS CONSIDERED THE LEARNED DEPARTMENTA L REPRESENTATIVE CONTENDED THAT THE COMMERCIAL AREA IN THIS CASE WOULD EXCEED 10% A ND HENCE THE ASSESSEE BECOMES INELIGIBLE TO DEDUCTION. ITA NO.2170/MUM/2009 M/S.BHUMIRAJ HOMES LIMITED. 5 8. WE ARE NOT CONVINCED WITH THE SUBMISSI ON ADVANCED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. ON A PERTINENT QUERY I T WAS ADMITTED BY HIM THAT THERE WAS NO EVIDENCE ABOUT THE COMMERCIAL AREA NOT BEING ON THE GROUND FLOOR. IT, THEREFORE, DEPICTS THAT THE COMMERCIAL AREA BEING S HOPS ETC. WERE SITUATED ON THE GROUND FLOOR OF THE BUILDING. IF THAT BE THE CASE T HEN THE BUILT UP AREA FOR STAIRCASE AND PASSAGE, LIFT OR LIFT ROOM ARE TO BE CONSIDERED AS PART AND PARCEL OF RESIDENTIAL AREA BECAUSE THESE ARE ONLY TO FACILITATE RESIDENTS FOR GOING UP AND COMING DOWN FROM THE BUILDING. IT DOES NOT ASSIST SHOPS, IN ANY MANNER, TO FUNCTION WITH THE HELP OF STAIRCASE, LIFT AREA, LIFT ROOM ETC. IN SUCH A S ITUATION THE BUILT UP ARE COVERED UNDER STAIRCASE, LIFE PASSAGE, LIFT ROOM ETC. HAS T O BE CONSIDERED AS PART AND PARCEL OF RESIDENTIAL AREA AND NOT AS COMMERCIAL AREA. THE LEARNED DEPARTMENTAL REPRESENTATIVE THEN CONTENDED ABOUT THE SIZE OF PLO T WHICH IS ADMITTEDLY MORE THAN ONE ACRE IN THIS CASE AS PER HIS CALCULATION. WE AR E UNABLE TO APPRECIATE THE VIEW POINT OF THE DEPARTMENT THAT THE UN-BUILT UP AREA S HOULD ALSO BE CONSIDERED IN PROPORTION TO THE RESIDENTIAL AND COMMERCIAL AREA. IT IS OBVIOUS THAT THERE CANNOT BE 100% CONSTRUCTION ON ANY PLOT. SOME AREA HAS TO BE LEFT OPEN AS PER THE PLAN AND CONSTRUCTION CAN BE DONE ONLY AS PER THE SPECIFICAT IONS APPROVED BY THE COMPETENT AUTHORITY. BY NO STRETCH OF IMAGINATION CAN AN OPEN AREA BE CONSIDERED AS PROPORTIONATELY RELATABLE TO RESIDENTIAL AS WELL AS COMMERCIAL AREA. AS THE SIZE OF THE PLOT IN THIS CASE IS MORE THAN ONE ACRE, CONDIT ION U/S.80IB(10)(B) ALSO STANDS FULLY SATISFIED. INSOFAR AS THE RELIANCE OF THE KOL KATA BENCH ORDER IN BENGAL ABUJA HOUSING DEVELOPMENT LTD. (SUPRA) IS CONCERNED, WE A RE AGAIN UNABLE TO FIND ANY FINDING GIVEN BY THE TRIBUNAL WHICH COMES IN THE WA Y OF GRANTING DEDUCTION TO THE ASSESSEE IN CONSONANCE WITH THE JUDGEMENT OF THE HO NBLE JURISDICTIONAL HIGH COURT. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO CERTAIN SUBMISSIONS MADE BEFORE THE KOLKATA BENCH BUT WAS U NABLE TO POINT OUT THE RELEVANT PARTS OF THE TRIBUNAL ORDER WHEREIN SUCH S UBMISSIONS HAVE BEEN ACCEPTED. ITA NO.2170/MUM/2009 M/S.BHUMIRAJ HOMES LIMITED. 6 WE ARE FURTHER NOT CONVINCED WITH THE CONTENTION PU T FORTH BY HIM THAT ONLY THE HOUSING PROJECTS SHOULD BE CONSIDERED AS ELIGIBLE FOR DEDUCTION WHICH, IN HIS OPINION, EMERGES FROM THE PLAIN READING OF SUB-SE CTION (10) OF SECTION 80IB. THE REASON IS OBVIOUS THAT THE HONBLE JURISDICTIONAL H IGH COURT, AFTER THOROUGH ANALYSIS OF THE PROVISION, HAS HELD THAT DEDUCTION IS ELIGIBLE TO HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY AS SUCH OR AS RESI DENTIAL PLUS COMMERCIAL PROJECT HAVING RESIDENTIAL AS WELL AS COMMERCIAL UNITS TO T HE EXTENT PERMITTED UNDER THE DC RULES. AS THE ASSESSEE ALL THE RELEVANT CONDITIONS FOR THE GRANT OF DEDUCTION UNDER THIS SECTION, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN REFUSING TO GRANT DEDUCTION ACCORDINGLY. 9. SINCE THE PRESENT PROCEEDINGS ARE EMERGING FROM NOTICE U/S.148 AND THE ASSESSMENT HAS BEEN FRAMED U/S.143(3) R.W.S. 147, T HE ASSESSEE CAN BE ALLOWED DEDUCTION U/S.80IB(10) ONLY TO THE EXTENT IT WAS DI SALLOWED IN THE PRESENT PROCEEDINGS WHICH AMOUNTS TO RS.2,23,85,571. INSOFA R AS THE DISALLOWANCE OF DEDUCTION TO THE TUNE OF RS.31,70,650 IS CONCERNED, THE SAME CANNOT BE CONFERRED ON THE ASSESSEE FOR THE REASON THAT IT WAS DISALLOW ED IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) AND NO MATERIAL HAS BEEN BR OUGHT TO OUR NOTICE TO INDICATE THAT SUCH ORDER HAS BEEN MODIFIED IN ANY MANNER. A S THE REASSESSMENT PROCEEDINGS ARE AIMED AT TAXING THE INCOME WHICH HAS ESCAPED AS SESSMENT, THESE CANNOT BE TAKEN AS A TOOL FOR PUTTING THE ASSESSEE IN A BETTE R POSITION THAN IN WHICH IT WAS BEFORE SUCH PROCEEDINGS. WE, THEREFORE, DIRECT TO A LLOW DEDUCTION U/S 80IB(1) FOR RS.2.23 CRORES AND ODD, WHICH HAS BEEN DISALLOWED I N THE PRESENT PROCEEDINGS. 10. FIRST GROUND ABOUT CHALLENGE TO INITIATION OF R EASSESSMENT PROCEEDINGS HAS BECOME INFRUCTUOUS IN VIEW OF RELIEF GIVEN TO THE A SSESSEE ON MERITS IN GROUND NO.2. NO SUBMISSION WAS ADVANCED IN SUPPORT OF GROUND NO. 3 WHICH DEALS WITH THE VIOLATION OF NATURAL JUSTICE. THIS GROUND IS HEREBY DISMISSED. ITA NO.2170/MUM/2009 M/S.BHUMIRAJ HOMES LIMITED. 7 11. GROUND NO.4, BEING THE CHARGING OF INTEREST IS CONSEQUENTIAL AND ACCORDINGLY DISPOSED OFF. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF MARCH, 2011 . SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 25 TH MARCH, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) X, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.