Shri Ramsingh Kumar, CHENNAI V. DCIT, CHENNAI

ITA 2195/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8119 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 21-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 143(3); 80IB; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NOS.: 2194, 2195 & 2196/MDS/2016 / ASSESSMENT YEARS : 2010-11, 2011-12 & 2012-13 SHRI RAMSINGH KUMAR, NO.7, 1 ST FLOOR, PAPANASAM SIVAN SALAI, SANTHOME, MYLAPORE, CHENNAI 600 004. PAN : AFDPR4037A V. THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 2, CHENNAI 600 034. ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL . CIT / DATE OF HEARING : 19.10.2016 / DATE OF PRONOUNCEMENT : 06.01.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : THESE THREE APPEALS OF THE ASSESSEE WAS DIRECTED AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, CHENNAI DATED 17.06.2016. 2 I.T.A. NO. 2194,2195 & 2196/MDS/2016 2. SINCE, ISSUE IN ALL THESE APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED, HEARD AND DISPOSED OFF B Y THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE FIRST GROUND OF APPEAL IN ITR NO.2194/MDS/20 16 FOR THE ASSESSMENT YEAR 2010-11 IS WITH REGARD TO REOPENING OF THE ASSESSMENT. THE ASSESSING OFFICER PASSED THE ORDER FOR THE ASSESSMENT YEAR 2010-11 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 13.02.2013, ACCEP TING THE RETURN OF INCOME. SUBSEQUENTLY, IT CAME TO THE NOTICE OF THE ASSESSING OFFICER, THAT THE ASSESSEE HAS VIOLATED THE CONDITI ONS LAID DOWN IN THE RECENTLY INSERTED CLAUSE (E) OF SECTION 80IB(10 ) OF THE ACT WHICH IS APPLICABLE WITH EFFECT FROM 01.04.2010. SINCE, THE ASSESSEE HAS SOLD 20 FLATS TO M/S. INDIAN OVERSEAS BANK, WHICH I S NOT AN INDIVIDUAL, ON THAT BASIS THE ASSESSING OFFICER REO PENED THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 BY ISSUI NG NOTICE UNDER SECTION 148 OF THE ACT ON 03.04.2014, WHICH I S WITHIN THE FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2010-11. NOW, THE ASSESSEES LD. COUNSEL STRONGLY OPPOSED THE REOPENI NG OF THE ASSESSMENT. ACCORDING TO THE LD. COUNSEL, THERE IS NO TANGIBLE 3 I.T.A. NO. 2194,2195 & 2196/MDS/2016 FRESH MATERIAL TO REOPEN THE CONCLUDED ASSESSMENT A ND IT IS BAD IN LAW. 4. IN OUR OPINION, WHILE THE ASSESSMENT WAS REOPENE D WITHIN THE FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2010-11 AND THERE WAS A PROVISION IN THE FORM OF CLAUSE (E) TO SECTION 80IB(10) OF THE ACT , INTRODUCED BY THE FINANCE ACT, 2010, WHIC H IS APPLICABLE W.E.F. 01.04.2010, WHICH READS AS FOLLOWS: NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL AND 5. AS SUCH, TO GIVE EFFECT TO THE ABOVE PROVISION, THE ASSESSING OFFICER RIGHTLY RECORDED THE REASON FOR R EOPENING AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. ACCORD INGLY AND VALIDLY, THE ASSESSING OFFICER REOPENED THE ASSESSM ENT. WE DO NOT FIND ANY INFIRMITY IN THE REOPENING OF THE ASSE SSMENT. THE SAME IS CONFIRMED. THIS GROUND OF THE ASSESSEE ON THIS ISSUE IN THE ASSESSMENT YEAR 2010-11 IS REJECTED. 6. THE NEXT GROUND IN ALL THESE APPEALS IS, WITH RE GARD TO DISALLOWANCE OF BENEFIT UNDER SECTION 80IB(10) OF T HE ACT, TO THE 4 I.T.A. NO. 2194,2195 & 2196/MDS/2016 ASSESSEE. IN THESE ASSESSMENT YEARS, ASSESSEE CLA IMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE SAME WAS REJECTED BY THE LOWER AUTHORITIES ON THE REASON THA T THE ASSESSEE VIOLATED THE PROVISIONS OF CLAUSE (E) OF SECTION 80 IB(10) OF THE ACT, AS THE ASSESSEE SOLD 20 FLATS TO ONE ASSESSEE NAMELY M/S. INDIAN OVERSEAS BANK, WHICH IS NOT AN INDIVIDUAL, O N THE OTHER HAND IT IS A PUBLIC SECTOR UNDERTAKING. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE BANK HAS PURCHASED THE 20 INDEPENDENT FLAT S FOR RESIDENTIAL USAGE OF 20 INDIVIDUALS WHO ARE LOW OR MIDDLE INCOME GROUP AND THE BANK IS OWNED AND CONTROLLED BY THE G OVERNMENT. THERE IS NO BAR IN SELLING THE FLATS TO PUBLIC SECT OR UNDERTAKING MORE SO FOR THE ASSESSMENT YEAR 2010-11, THAT PROVI SION CANNOT BE APPLIED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE CANNOT BE TOTAL DISALLOWANCE O F DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. HE PLEADED THAT PROPORTIONATE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT MAY BE GRANTED. HE RELIED ON THE FOLLOWING JUDGMENTS. 5 I.T.A. NO. 2194,2195 & 2196/MDS/2016 I) CIT V G.R. DEVELOPERS IN (2013) 353 ITR 0001, WH EREIN HELD THAT WHEN THE ACT CAME INTO EFFECT FROM 1 ST APRIL 2005, IT CANNOT BE HELD WITH RETROSPECTIVE AND IT WILL BE EFFECTIVE FROM SUBSEQUENT TO 01.04.2005. II) CIT V CHD DEVELOPERS LTD. IN (2014) 362 ITR 017 7, WHEREIN HOUSING PROJECT APPROVED BY LOCAL AUTHORITY PRIOR TO 1-4-2005, ARE ENTITLED TO 100 PER CENT BENEFIT O F S 80- IB(10) EVEN IN ABSENCE OF COMPLETION CERTIFICATE, S INCE AMENDMENT INSERTED BY FINANCE (NO.2) ACT OF 2004, W .E.F. 1-4-2005 TO S 80IB(10) WAS PROSPECTIVELY APPLICABLE . III) CIT V HAPPY HOME ENTERPRISES IN (2015) 372 ITR 0001 WHEREIN SECTION 80-IB(10)(D) IS PROSPECTIVE IN NATU RE AND CAN HAVE NO APPLICATION TO A HOUSING PROJECT THAT I S APPROVED BEFORE 31 ST MARCH 2005. IV) HE FURTHER RELIED ON ORDER OF THIS TRIBUNAL IN THE CASE OF M/S. ELEGANT ESTATES IN ITA NO. 2902/MDS/2014 DT. 27.02.2015 WHEREIN HELD THAT NOW, WE COME TO OTHER CIT(A)S FINDING THAT ASSESSE E FLATS NO.403 AND 404 MEASURE MORE THAN 1500 SQ.FEET I.E 1 653 AND 1572 SQ.FEET RESPECTIVELY. THE ASSESSEE FAILS TO REBUT THIS FACTUAL POSITION. SECTION 80IB(10)(C) PRESCRI BES MEASUREMENT OF A RESIDENTIAL UNIT TO BE UPTO 1500 S Q. FEET ONLY. WE FIND THAT THE LANGUAGE USED IN THIS SPECI FIC CLAUSE REFERS THE RESIDENTIAL UNIT. IN OTHER WORDS, THIS EXPRESSION DOES NOT BAR A DEDUCTION CLAIM ALTOGETHER IF SOME O F THE UNITS 6 I.T.A. NO. 2194,2195 & 2196/MDS/2016 SOLD EXCEED THE SPECIFIED DIMENSIONS. WE OBSERVE THAT IN SUCH A CASE, THE CONSEQUENTIAL DISALLOWANCE HAS TO BE PROPORTIONATE ONLY. IT HAS TO BE RESTRICTED TO PRO FITS DERIVED FROM THE RESIDENTIAL UNITS VIOLATING SECTION 80IB(1 0)(C). CASE LAW CIT VS. ARUN EXCELLO FOUNDATIONS (P) LTD (2013) 212 TAXMANN 342 (MAD) IS ALSO QUOTED IN SUPP ORT. THE ASSESSING AUTHORITY IS ACCORDINGLY DIRECTED TO MAKE PROPORTIONATE DISALLOWANCE AND PASS ITS CONSEQUENTI AL ORDER. 7.1 HE ALSO RELIED ON THE DECISIONS OF THE INCOME T AX APPELLATE TRIBUNAL CHENNAI IN THE CASES OF ARUN EXC ELLO FOUNDATIONS PVT. LTD., 108 TTJ 71 AND SANGHVI & DOS HI ENTERPRISES VS INCOME TAX OFFICER 131 ITD 151 (CHEN NAI-TM). 7.2 HE RELIED ON THE DECISION IN THE CASE EMGEEN HO LDINGS PVT LTD VS DEPUTY COMMISSIONER OF INCOME TAX 12 TAXMANN.COM 468 (MUM), WHERE SALE OF MORE THAN ONE RESIDENTIAL UNIT TO FAMILY MEMBERS HAS BEEN HELD TO BE NOT VIOLATIVE OF SEC. 80IB AS IT STOOD PRIOR TO THE AM ENDMENT. 8. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDER OF THE LOWER AUTHORITY AND SUBM ITTED THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF CLAUSE (E) I N SECTION 80IB(10) OF THE ACT, WHICH IS APPLICABLE FROM ASSES SMENT YEAR 7 I.T.A. NO. 2194,2195 & 2196/MDS/2016 2010-11. ACCORDINGLY, HE SUPPORTED THE ORDERS OF T HE LOWER AUTHORITIES. 9. WE HEARD BOTH THE REPRESENTATIVES AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. IN THIS CASE, ADMITT EDLY, THE ASSESSEE SOLD 20 FLATS TO M/S. INDIAN OVERSEAS BANK , WHICH IS NOT AN INDIVIDUAL. IN OUR OPINION, CLAUSE (E) OF S ECTION 80IB(10) OF THE ACT IS APPLICABLE FROM THE ASSESSMENT YEAR 2 010-11. HOWEVER, AS HELD BY JUDICIAL HIGH COURT IN THE CASE OF CIT VS. ARUN EXCELLO FOUNDATIONS PVT. LTD. 259 CTR 362, THE DEDUCTION UNDER SECTION 80IB(10) CANNOT BE DENIED IN TOTO. ON THE OTHER HAND, IF THERE IS A VIOLATION, ONLY THAT INCOME GEN ERATED FROM SALE OF THOSE FLATS NOT TO BE CONSIDERED FOR DEDUCTION U NDER SECTION 80IB(10) OF THE ACT. IN OTHER WORDS, DEDUCTION UND ER SECTION 80IB(10) OF THE ACT IS ALLOWABLE ON PRO-RATA BASIS AND 80IB(10) DEDUCTION TO BE GRANTED ACCORDINGLY. 10. THUS, WE ARE INCLINED TO REMIT THE ISSUE RELATI NG TO THE GRANTING OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, IN ALL THE ASSESSMENT YEARS, TO THE FILE OF THE ASSESSING OFFI CER FOR GRANTING OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, ON PRO-RATA BASIS 8 I.T.A. NO. 2194,2195 & 2196/MDS/2016 AND DECIDE ACCORDINGLY. IN THE RESULT, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 6 TH JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (CHANDRA POOJARI) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 6 TH JANUARY, 2017. JR. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A)-2, CHENNAI 4. /CIT 5. /DR 6. /GF.