ITO 25(2)(3), MUMBAI V. SWASTIK DEVELOPERS, MUMBAI

ITA 226/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2347 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: VIRAG SHAH
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO. 226/MUM/2014 ( / ASSESSMENT YEAR:2005-06 THE ITO - 25(2)(3), BLDG. C-11, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 / VS. M/S. SWASTIK DEVELOPERS, A/102, RAJ CRYSTAL, ROYAL COMPLEX, EKSAR ROAD, BORIVALI (W), MUMBAI-400 092 ./ ./ PAN/GIR NO.AANFS 1662H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI R.K. SAHU / RESPONDENT BY: SHRI VIRAG SHAH / DATE OF HEARING :26.07.2016 ! / DATE OF PRONOUNCEMENT :29.07.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT(A)-35, MUMBAI DATED 24.10.2013 PERTAINING TO AS SESSMENT YEAR 2005-06. 2. THE REVENUE IS CHALLENGING THE ORDER OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(10) OF TH E ACT. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITS THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2004 -05, THE CLAIM OF ITA NO. 226/M/2014 2 THE ASSESSEE U/S. 80IB(10) WAS ALLOWED BY THE CO-OR DINATE BENCH OF THE TRIBUNAL BY SUSTAINING THE ORDER OF THE LD. CI T(A) AND DISMISSING THE REVENUE APPEAL. THEREFORE HE PRAYS THAT SINCE FACTS AND CIRCUMSTANCES BEING SIMILAR, THE SAME MAY BE FOLLOW ED FOR THIS ASSESSMENT YEAR ALSO. 4. THE LD. DEPARTMENTAL REPRESENTATIVE PLACES RELIA NCE ON THE ORDERS OF THE ASSESSING OFFICER. 5. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW. IN THIS CASE, THE ASSESSING OFFICER DENIED DEDUCTION U/S. 8 0IB(10) OF THE ACT ON THE HOUSING PROJECT CONSTRUCTED BY THE ASSESSEE ON THE GROUND THAT THE PROJECT WAS COMMENCED WELL BEFORE THE CRUC IAL DATE SPECIFIED IN SEC. 80IB(10) AND OBTAINED COMPLETION CERTIFICATE BEFORE 31.3.2008. THEREFORE, CONDITIONS SPECIFIED IN SEC. 80IB(10) HAVE NOT BEEN COMPLIED WITH. THE LD. CIT(A) FOLLOWING THE O RDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 AND 2003-04 ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: 3. THE HONBLE ITAT, MUMBAI HAS HEARD APPEAL OF TH E APPELLANT FOR A.Y.2007-08 AND FOR A.Y.2003-04. THE ISSUE IS FOUND TO BE IDENTICAL AND IN ITA NO.3628 & 3659/M/11 DATED 28.0 8.2013, THE HONBLE ITAT HAVE UPHELD THE VIEW OF THE CIT(A) THEREBY ALLOWING THE DEDUCTION CLAIMED BY THE APPELLANT U/S .80IB(10) IN RESPECT OF THE CONCERNED PROJECT SUNDAR SAGAR FOR A.YRS 2003-04 AND 2007-08. THE HONBLE ITAT HAVE BASED T HEIR DECISION ON THE DECISIONS OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. VANDANA PROPERTIES, ITA NO. 3633 OF 2009 AND 4361 OF 2010 DATED 28.03.2012 AND THE CASE OF CIT V S. BRAHMA ASSOCIATES (2011) 333 ITR 289. 4. RESPECTFULLY FOLLOWING THE DECISIONS IN THE APPE LLANTSS OWN CASE, THE APPEAL IS ALLOWED. 6. WE ALSO FIND THAT SIMILAR CLAIM OF THE ASSESSEE HAS BEEN UPHELD BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO. 176/M/2013 DATED 19.2.2016 OBSERVING AS UNDER: ITA NO. 226/M/2014 3 12. WE HAVE HEARD THE COUNSEL OF THE PARTIES AND PERUSED THE ORDERS PASSED BY LEARNED CIT(A) AND OPE RATIVE PARA OF LEARNED CIT(A) IS AS UNDER :- 6. WITHOUT PREJUDICE TO THE ABOVE, ON MERITS IT IS SEEN THAT WHAT THE SECTION REQUIRES 5 COMMENCEMENT OF THE PROJECT AFTER 01.10.1998 AND NOT THE APPROVAL OF TH E PROJECT AFTER 01.10.1998 AND THIS POINT WAS DULY EX AMINED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS WHER EAS THE AO BASED ON EXPLANATION (I) TO SECTION 80IB(10) WHI CH WAS INSERTED BY FINANCE ACT, 2004 W.E.F. 01.04.2005 HEL D THAT THE PROJECT IS DEEMED TO HAVE BEEN APPROVED ON THE DATE ON- WHICH THE BUILDING PLAN WAS FIRST APPROVED BY T HE LOCAL AUTHORITY. FURTHER, THIS EXPLANATION WAS RELEVANT O NLY TO DETERMINE THE PERIOD OF COMPLETION OF THE PROJECT A ND NOT FOR DETERMINING THE COMMENCEMENT OF THE PROJECT. TH E AO MISDIRECTED HIMSELF IN APPLYING THIS EXPLANATION FO R COMMENCEMENT OF THE PROJECT IGNORING THE FACT THAT THE CONDITION IN SECTION 801B(10) IS THAT THE PROJECT S HOULD BE COMMENCED ON OR AFTER 1.10.1998. THUS, THE FIRST RE ASONING GIVEN BY THE A.O. IS NOT CORRECT. REGARDING COMPLET ION OF THE PROJECT BEFORE 31.03.2008, I FIND THAT THE A.O. HELD THAT, THE AMENDMENT IN SECTION 80IB(10) WAS CLARIFICATORY IN NATURE, HOWEVER, THE STAND OF THE AO CANNOT BE ACCE PTED AS THE AMENDMENT IS ALWAYS PROSPECTIVE IN NATURE UN LESS IT IS SPECIFICALLY PROV I DED THAT THE SAME IS RETROSPECTIVE IN NATURE. RECENTLY THE JURISDICTIONAL HIGH COURT OF B OMBAY HELD IN THE CASE OF BRAHMA ASSOCIATES BY JUDGMENT D T. 22.02.2011 THAT CLAUSE (D) INSERTED TO SECTION 80IB (10) W.E.F. 01.04,2005 IS PROSPECTIVE AND NOT RETROSPECT IVE AND HENCE IT CANNOT BE APPLIED FOR THE PERIOD PRIOR TO 01.04.2005. FOLLOWING THE SAME RATIO, I FIND THAT T HE AMENDMENT BY FINANCE ACT, 2004 W.E.F. 01.04.2005 CA NNOT BE APPLIED FOR THE ASSESSMENT YEARS UPTO A.Y. 2004- 05. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN DENYING DE DUCTION U/S. 80IB (10) AND HE IS DIRECTED TO ALLOW THE SAME AS CLAIMED BY THE APPELLANT. 13. AFTER CONSIDERING THE AFOREMENTIONED ORDER OF LEARNED CIT(A) AND AFTER HEARING THE BOTH THE COUNS ELS OF THE PARTY WE ARE OF THE VIEW THAT LEARNED CIT(A) HA S CORRECTLY INTERPRETED THE PROVISIONS CONTAINED IN S ECTION ITA NO. 226/M/2014 4 AND HAS RIGHTLY CONSIDERED THAT SECTION REQUIRES IS COMMENCEMENT OF THE PROJECT AFTER 1.10.1998 AND NOT THE APPROVAL OF THE PROJECT AFTER 1.10.1998. LEARNED CI T(A) HAS RIGHTLY HELD THAT THE ASSESSING OFFICER MISDIRE CTED HIMSELF IN APPLYING THIS EXPLANATION FOR COMMENCEME NT OF THE PROJECT IGNORING THE FACT THAT THE CONDITION IN SECTION 80IB(10) IS THAT THE PROJECT SHOULD BE COMMENCED ON OR BEFORE 1.10.1998. THEREFORE THE ASSESSING OFFICER H AS NOT CORRECTLY APPRECIATED THE PROVISIONS OF LAW. WE HA VE ALSO CONSIDERED THE JUDGMENTS PASSED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES(SUPRA), WH EREIN IT HAS BEEN CATEGORICALLY MENTIONED THAT CLAUSE (D) INSERTED TO SECTION 80IB(10) IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE IT CANNOT BE APPLIED FOR TH E PERIOD 1.4.2005. THE SAID RATIO WAS ALSO FOLLOWED BY LEARN ED CIT(A) AND IT HAS BEEN RIGHTLY HELD THAT AMENDMENT BY THE FINANCE ACT, 2004 W.E.F. 1.4.2005 CANNOT BE APPLIED FOR THE ASSESSMENT YEARS UPTO A.Y. 2004-05. THEREFORE ORDER PASSED BY LEARNED CIT(A) DOES NOT REQUIRE ANY INTER FERENCE FROM US, HENCE WE UPHOLD THE ORDER PASSED BY LEARNE D CIT(A) AND REJECT THE GROUNDS RAISED BY THE REVENUE . SINCE THE TRIBUNAL HAS ALREADY ALLOWED THE CLAIM OF THE ASSESSEE U/S. 80IB(10) OF THE ACT FOR ASSESSMENT YE ARS 2003-04, 2004-05 & 2007-08, THE CLAIM OF THE ASSESSEE IS ALL OWED FOR THIS ASSESSMENT YEAR ALSO I.E. 2005-06. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 29 TH JULY, 2016 . % . ./ RJ , SR. PS ITA NO. 226/M/2014 5 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI