Deputy Commissioner of Income-tax, V. Prakruti Construction Pvt. Ltd, Mumbai

ITA 2213/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8464 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2213/PN/2013 (ASSESSMENT YEAR : 2005-06) DCIT, CIRCLE-4, PUNE .. APPELLANT VS. PRAKRUTI CONSTRUCTION PVT. LTD., 102, KRISHNA CHAMBERS, 59, NEW MARINE LINES, MUMBAI 400 020 .. RESPONDENT PAN NO.AAACP 9299D ASSESSEE BY : SHRI RAJENDRA AGIWAL DEPARTMENT BY : SHRI RAJESH DAMOR DATE OF HEARING : 30-10-2014 DATE OF PRONOUNCEMENT : 31-10-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30-08-2013 OF THE CIT(A)-II, PUNE R ELATING TO ASSESSMENT YEAR 2005-06. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOUSING PROJECTS. IT FILED ITS RETURN OF INCOME ON 28-10- 2005 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION OF RS.1,19,83,041/- U/S.80IB(10) OF THE I.T. ACT. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT ASSESSEES PROJECT PINNACLE IS HAVING COMMERCIAL AREA OF 8565 SQ.FT. WHICH WAS MORE THAN THE PRESCRIBED AREA OF 2000 SQ.FT. AS PER PROVISIONS OF SECTION 80IB(10) A ND 2 THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING OF DEDUCTION U/S. 80IB(10). RELYING ON THE DECISION O F THE CIT(A) PUNE IN THE CASE OF M/S. KUMAR BEHARAY RATHI FOR A.YRS. 2003-04 TO 2004-05 VIDE ORDER DATED 31-07-20 06 AND 03-07-2007, THE AO REJECTED THE CLAIM OF THE AS SESSEE MADE U/S.80IB(10) OF THE I.T. ACT. 3. IN APPEAL THE LD.CIT(A) FOLLOWING THE DECISION O F THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2004-05 AND 2007-08 DIRECTED THE AO TO ALLOW THE CLAIM OF DEDUCTION U/S.80IB(10) AMOUNTING TO RS.1,19,83,041/-. THE OPERATIVE PART OF THE ORDER OF THE CIT(A) READS AS UNDER : 3.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN GROUND OF APPEAL NO. 1 RAISED THE APPELLANT HAS CONTESTED THE DISALLOWANCE OF CLAIM O F DEDUCTION U/S 80IB(10) AMOUNTING LO RS. 1,19,83,041/-. DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE'S PROJECT 'PINNACLE' WAS HAVING COMMERCIAL AREA OF 8565 SQ. F T. WHICH WAS MORE THAN THE PRESCRIBED AREA OF 2000 SQ. FT. AS PER SECTION 80IB(10) AND THUS WAS NOT ELIGIBLE FOR THE DEDUCTION CLAIMED. FURTHER, RELYIN G ON THE CIT (A)-II, PUNE'S DECISION IN THE CASE OF M/S. KUMAR BEHARAY RATHI FOR A.Y.2003-04 & A.Y. 2004- 05 VIDE ORDERS DATED 31 10.2006 & 03.06.2007 REJECTED THE APPELLANTS CLAIM OF DEDUCTION. 3.3 DURING THE APPELLATE PROCEEDINGS THE APPELLANT PLACING RELIANCE ON THE DECISION OF HON'BLE SPE CIAL BENCH DECISION IN THE CASE OF BRAHMA ASSOCIATES, 119 ITD 255 AND MUMBAI ITAT DECISION IN THE CASE OF M/S LAUKIK DEVELOPERS, 108 TTJ 364, SUBMITTED FLAT IT'S PROJECT WAS ELIGIBLE FOR DEDUCT ION U/S.80IB(10) OF THE ACT. IT IS FURTHER SUBMITTED TH AT ITS CASE FOR THE YEAR UNDER CONSIDERATION WAS ALSO COVERED BY THE DECISION OF MUMBAI ITAT IN ITS OWN CASE FOR ASSESSMENT YEARS 2004-05 AND 2007-08. HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSION, THE APPELLANT'S CASE IS FOUND TO BE SQUARELY COVERED BY THE DECISION OF THE ITAT MUMBAI WHICH WAS DULY CONSIDERED WHILE ADJUDICATING THE MATTER IN APPELLANT'S CASE FOR A.Y . 3 2004-05 AND A.Y. 2007-08. THE OPERATIVE PORTION OF THE HON'BLE ITAT, MUMBAI'S ORDER DATED 20.07.2011 IN APPELLANT'S OWN CASE FOR A.Y. 2004-05 AND A.Y. 2007-08 IS REPRODUCED HEREINBELOW: ITA NO.2264/MUM/2011 (A.Y. 2004-05) .. .. 28. APPLYING THE RATIO OF THE ABOVE DECISIONS, RELI ED ON BY THE LEARNED COUNSEL FOR THE ASSESSES TO THE FACTS OF THE PRESENT CASE AND KEEPING IN VIEW THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) HAS BEEN CONSIDERED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND ALSO BY THE HON'BLE HIGH COURT IN THE CASE OF CIT V/S BRAHMA ASSOCIATES (SUPRA), WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN NOT FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN BRAHMA ASSOCIATES (SUPRA) AND HAS FURTHER ERRED IN VIOLATING THE RULE OF JUDICIAL DISCIPLINE AS IT IS SETTLED LAW THAT THE DECISION O F THE JURISDICTIONAL TRIBUNAL OR SPECIAL BENCH OF THE TRIBUNAL AND THE JURISDICTIONAL HIGH COURT IS BINDI NG ON THE AUTHORITIES WORKING UNDER THAT JURISDICTION. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT IT IS A CASE OF MERE CHANGE OF OPINION AS TO THE TRUE CONSTRUCTION OF THE PROVISION, COULD NOT ALSO GIVE RISE TO 'REASON TO BELIEVE' THAT INCOME HAD ESCAPED ASSESSMENT, AND, THEREFORE, THE PROCEEDINGS INITIAT ED UNDER SECTIONS 147/148 OF THE ACT ARE INVALID AND CONSEQUENTLY THE ORDER OF THE RE-ASSESSMENT PASSED BY THE AO IS ANNULLED. 29. ON MERITS, IN THE PRESENCE OF ANY CONTRARY DECISION PLACED ON RECORD BY THE LEARNED D.R. AGAIN ST THE DECISION OF BRAHMA ASSOCIATES (SUPRA) WE ARE OF THE VIEW THAT THE ASSESSES IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AS UNDISPUTEDLY THE DEDUCTION UNDER SECTION 80IB10) IS ON THE PROFI TS DERIVED FROM THE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY AS & WHOLE. THE ORDER PASSED BY THE AO AND THE LEARNED COMMISSIONER OF INCOME TAX (A) DISALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) IS REVERSED AND CONSEQUENTLY THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER SECTION 801 B(10) I S ALLOWED. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE. ALLOWED. ITA NO.2265/MUM/2011 (AY-2007-08) 4 30. AT THE TIME OF HEARING, BOTH PARTIES HAVE AGREED THAT THE FACTS OF THE ABOVE ISSUE ARE SIMILA R TO THE FACTS OF THE CASE FOR THE ASSESSMENT YEAR 2004-05, THEREFORE, THE PLEA TAKEN BY THEM IN RESPECT OF DEDUCTION UNDER SECTION 80IB(10) IN THE APPEAL FOR THE SAID ASSESSMENT YEAR MAY BE CONSIDERED WHILE DECIDING THE APPEAL FOR THIS YEAR. 31. THAT, BEING SO AND IN THE ABSENCE OF ANY DISTINGUISHING FEATURES BROUGHT ON RECORD BY THE PARTIES, WE, FOR THE REASONS AS MENTIONED IN ASSESSEE'S APPEAL FOR THE ASSESSMENT YEAR 2004-05 IN PARAGRAPH 29 OF THIS ORDER HOLD THAT THE AS- ASSESSEE IS ENTITLED TO THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AS CLAIMED. THE AO IS DIRECTED TO ALLOW THE SAME. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED 33. IN THE RESULT, THE ASSESSEE'S APPEALS ARE ALLOWED. 3.4 IN VIEW OF THE ABOVE FACTO, SINCE THE FACTUAL MATRIX IS PARI MATERIAL THE SAME AS IN THE ABOVE ASSESSMENT YEARS FOLLOWING THE DECISION OF MUMBAI ITAT IN THIS REGARD IN THE APPELLANT'S OWN CASE FOR A.Y. 2004-05 AND 2007-08, THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S 80IB(10) AMOUNTING TO RS.1,19,83,041/- FOR THE YEAR UNDER CONSIDERATIO N. GROUND OF APPEAL NO. 1 RAISED BY THE APPELLANT IS, THEREFORE, LIABLE TO BE ALLOWED. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) ERRED IN ALLOWING THE DEDUCTION U/S.80IB(10) OF THE ACT TO THE PROJECT 'KUMAR PINNACLE' EVEN WHEN THE PROJECT DID NOT SATISFY THE CONDITIONS AS STIPULATED IN SECTION 80IB(10) OF THE ACT. 2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN HOLDING THAT THE AMENDED PROVISIONS U/S.80IB(10)(D) WOULD NOT BE APPLICABLE TO PROJECTS COMMENCED PRIOR TO 01.04.2005. 3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN ERRED IN COMING TO THE ABOVE CONCLUSION ON THE INCORRECT PREMISE THAT ESTOPPEL C AN BE INVOKED AGAINST THE GOVERNMENT IN EXERCISE OF ITS LEGISLATIVE POWERS. 4) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN HOLDING THAT THOUGH THE AMENDED PROVISION OF SECTION 80IB(10)(D) CAME INTO OPERATION W.E.F 01.04.2005, THOSE WERE NOT APPLICABLE IN THE CASE O F 5 ASSESSEE RELATING TO A.Y.2005-06 WITHOUT APPRECIATI NG AND APPLYING THE PRINCIPLE LAID DOWN BY HON'BLE SUP REME COURT IN THE CASE OF CIT VS. ISTHMIAN STEAMSHIP LIN E, 20 ITR 52 AND KARIMTHARUVI TEA ESTATE LTD., 60 ITR 262 . 5) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THAT EVEN IF TH E AMENDED LAW WAS PROSPECTIVE, THE LIMITATION OF RESTRICTIONS U/S.80IB(10)(D) WAS STILL APPLICABLE T O A.Y. 2005-06 RELYING UPON RELIANCE JUTE INDUSTRIES VS. C IT REPORTED IN 120 ITR 921 (SC). 6) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS OF APPEAL. 5. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE AO. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2004-05 AND 2007-08 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, AND O N FURTHER APPEAL BY THE REVENUE, THE HONBLE HIGH COURT DISMI SSED THE APPEAL FILED BY THE REVENUE VIDE ITA NO.196 OF 2012 ORDER DATED 23-04-2014. THEREFORE, THIS BEING A CO VERED MATTER IN ASSESSEES OWN CASE, THE GROUNDS RAISED B Y THE REVENUE SHOULD BE DISMISSED. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND TH E CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE AS SESSEE. WE FIND THE AO, IN THE INSTANT CASE, DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB(10) ON THE GROUND THAT THE ASSES SEES PROJECT PINNACLE WAS HAVING COMMERCIAL AREA OF 85 65 SQ.FT. WHICH WAS MORE THAN THE PRESCRIBED AREA OF 2 000 SQ.FT. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFO RE THE MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR 6 A.YRS. 2004-05 AND 2007-08 WHEREIN THE CLAIM OF DEDUCTION U/S.80IB(10) FOR THE VERY SAID PROJECT DE NIED BY THE AO AND UPHELD BY THE CIT(A) WAS ALLOWED. THE A PPEAL FILED BY THE REVENUE WAS DISMISSED BY THE HONBLE H IGH COURT BY OBSERVING AS UNDER : 5 THE TRIBUNAL HAS CONSIDERED THE MERITS OF THE CLAIM WHICH IS SUBJECT MATTER OF THE RE-ASSESSMENT PROCEEDINGS. ON MERITS, IT HAS FOUND THAT THE ASSESSEE'S CONTENTIONS DESERVE TO BE ACCEPTED. THE TRIBUNAL HAS FOUND THAT THE JUDGMENT DELIVERED IN THE CASE OF LAUKIK DEVELOPERS CANNOT BE APPLIED. THE SUBSEQUENT DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S. BRAHMA ASSOCIATES VS. JCIT (2009) (119) ITD 255), AND WHICH HAS ALSO RECEIVED ACCEPTANCE BY THIS COURT WOULD BE THE GOVERNING LAW. IN TERMS OF THE SAME, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961. THE PROJECT IS A HOUSING PROJECT AND APPROVED BY THE LOCAL AUTHORITY AS A WHOLE. SOME PART OR PORTION THEREOF HAVING BEEN EARMARKED FOR NON- RESIDENTIAL USE BY ITSELF WOULD NOT MEAN THAT THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION CLAIMED. WE ARE OF THE VIEW THAT THE JUDGMENT IN THE CASE OF BRAHMA ASSOCIATES MAY HAVE BEEN CHALLENGED IN THE HON'BLE SUPREME COURT OF INDIA. THE CHALLENGE MAY BE PENDING, BUT SO LONG AS THIS JUDGMENT IS SET ASIDE OR REVERSED, THEN WE ARE BOUND BY THE SAME. THE TRIBUNAL HAVING APPLIED THE PRINCIPLE LAID DOWN IN THIS JUDGMENT AN D EQUALLY THE PRINCIPLE ENABLING INTERFERENCE IN REASSESSMENT PROCEEDINGS THAT THE PRESENT APPEAL DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 7.1 WE FIND THE JURISDICTION OF THE CASE OF THE ASS ESSEE HAS BEEN TRANSFERRED FROM MUMBAI TO PUNE. HOWEVER, THE FACT REMAINS THAT IN ASSESSEES OWN CASE FOR THE VE RY SAID PROJECT, UNDER IDENTICAL FACTS AND CIRCUMSTANCES, T HE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE WHICH HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT. UNDER THESE CIRCUMSTANCES AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE DECISION OF THE HONBLE HIGH COURT IN ASSESSEES OWN CASE, W E UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE WHO HA S 7 FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WHICH HAS SINCE BEEN UPHELD BY THE HONBLE HIGH COU RT. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31-10-2014. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 31 ST OCTOBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, PUNE 4. CIT-II, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE