M/s. Ganapathi Leather Products Pvt. Ltd., CHENNAI V. ITO, CHENNAI

ITA 2267/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7878 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 19-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 01-08-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Principle of natural justice; Competent authority
• Section: 143(3); 115JB

Judgement Text

, ' ' , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , % & BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ( ) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ,-( ) / RESPONDENT BY : MR. SUPRIYA PAL, JCIT ) /DATE OF HEARING : 19.09.2016 ) /DATE OF PRONOUNCEMENT : 14.12.2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 6, CHENNAI IN ITA NO. 35/CIT (A)-6/2015-16 DATED 12.07.2016 PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT. ./ I.T.A. NO. 2267/MDS/2016 / ASSESSMENT YEAR : 2012-13 M/S. GANAPATHI LEATHER PRODUCTS P LTD., NO. 8B, 2 ND FLOOR, WELLINGDON ESTATE, 53, C-IN-C ROAD, EGMORE, CHENNAI - 600 008. [PAN: AABCG 8143Q] VS. THE INCOME TAX OFFICER, CORPORATE WARD 2(3), CHENNAI. ( / APPELLANT) ( /RESPONDENT) :-2-: I.T.A. NO. 2267/MDS/2016 2. THE FOLLOWING GROUNDS RAISED BY THE ASSESSEE ARE : 2.1 THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S. 80 IB (10) OF THE ACT AGGREGATING T O RS. 5,31,25,988/- IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 2.2 THE CIT(A) FAILED TO APPRECIATE THAT NON PRODUC TION OF THE COMPLETION CERTIFICATE WAS BEYOND THE CONTROL OF THE APPELLAN T AND OUGHT TO HAVE APPRECIATED THAT THE COMPLETION OF THE HOUSING PRO JECT WAS NEVER IN DOUBT IN AS MUCH AS OUGHT TO HAVE APPRECIATED THAT THE PRESUMPTION OF NON COMPLETION OF THE HOUSING PROJECT BASED ON THE NON AVAILABILITY OF THE COMPLETION CERTIFICATE WAS NOT CORRECT AND NOT JUSTIFIED THEREBY VITIATING THE FINDINGS IN PARA 4.4 OF THE IMPUGNED ORDER. 2.3 THE CIT(A) FAILED TO APPRECIATE THAT THE DECISI ON REFERRED TO IN THE IMPUGNED ORDER TO REJECT THE CLAIM OF THE SAID DED UCTION WAS NOT APPRECIATED THAT THE PURPOSIVE THEORY AS WELL AS T HE LIBERAL INTERPRETATION OF THE PROVISIONS UNDER SCRUTINY WE RE NOT TAKEN NOTE OF IN THE SAID DECISION THEREBY VITIATING THE CONCLUS ION REACHED IN THE PRESENT CASE. 2.4 THE CIT(A) FAILED TO APPRECIATE THAT HAVING TAK EN ON RECORD THE EVIDENCES DEMONSTRATING THE COMPLETION OF THE HOUS ING PROJECT, THE :-3-: I.T.A. NO. 2267/MDS/2016 TECHNICAL STAND TAKEN TO REJECT THE CLAIM FOR DEDU CTION WAS WHOLLY UNJUSTIFIED AND NOT SUSTAINABLE IN LAW. 2.5 THE CIT(A) FAILED TO APPRECIATE THAT THE CONDIT IONS PRESCRIBED TO MAKE THE CLAIM FOR THE SAID DEDUCTION U/S. 80 IB (10) O F THE ACT WERE COMPLIED WITH CONCURRENTLY ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2.6 THE CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTICE WOULD BE NULLITY IN LAW. 3. THE BRIEF FACTS OF THE CASE, THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT AND FILE D THE RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 21.09.2012 WITH TOTAL I NCOME OF RS 2,35,490/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UN DER CASS AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOT ICE, THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED T HE DETAILS. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COMPANY HAS TAKEN U P THE INFRASTRUCTURE DEVELOPMENT ALONG WITH ANOTHER GROUP COMPANY FOR PR OMOTING THE HOUSE PROJECT IN THE OUTSKIRTS OF CHENNAI UNDER THE NAME OF 'VAND ALUR PARK' AND CLAIMED DEDUCTION U/S. 80 IB (10) OF THE ACT RS. 5,31,25,98 8/- AND ALSO COMPUTED TAX LIABILITY UNDER PROVISIONS OF SECTION 115JB OF THE ACT. :-4-: I.T.A. NO. 2267/MDS/2016 4. THE LD. AO HAS CALLED FOR CERTAIN DETAILS IN RE SPECT OF COMPLETION OF PROJECTS AND CONSIDERED THE VARIOUS FACTS AND CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT COMPLIED THE CONDITIONS U/S. 80 IB (10) OF THE ACT AND NOT SUBMITTED COMPLETION CERTIFICATE. THE ASSESSEE HAS OBTAINED PERMISSION FROM CMDA THROUGH APPROVAL DATED 27.03.2006 AND ALSO FRO M COMMISSIONER, KATTANKALATHUR TOWN PANCHAYAT ON 31.03.2006, WHEREA S THE COMMERCIAL AREA EXCEEDED 3% OF THE TOTAL CONSTRUCTED AREA AND THE PERMISSION WAS OBTAINED BY THE ASSESSEE INCLUDING COMMERCIAL BLOCK AND PROJECT IS NOT WHOLLY RESIDENTIAL. HENCE, ASSESSEE IS NOT ELIGIBLE FOR THE BENEFIT OF DEDUCTION U/S. 80 IB (10) OF THE ACT. THE LD AR SUBMITTED THAT THE PROJECT WAS DEVE LOPED ON THE LAND AREA EXCEEDING 1 ACRE AND ALLOTTEES OF FLATS ARE NOT IDE NTICAL AND NONE OF THE CONSTRUCTION AREA OF FLAT EXCEEDED 1500 SQ. FT., AN D CONSTRUCTION WAS COMPLETED ON 28.08.2009 WITHIN THE FIVE YEARS FROM THE DATE O F APPROVAL FROM THE CMDA ON 27.03.2006. FURTHER, THE ASSESSEE FILED WRIT PETIT ION NO. 26812/2009 IN THE HIGH COURT OF MADRAS AND AS PER THE DIRECTIONS OF HON'BL E HIGH COURT. THE MEMBER SECRETARY, CMDA IS REQUIRED TO ISSUE COMPLETION CER TIFICATE. THE LD. AO FIND THAT THE ASSESSEE HAS OBTAINED PERMISSION IN RESPECT OF COMMERCIAL BLOCK BEING A SEPARATE COMMERCIAL BLOCK AND WHERE CONSTRUCTION WO RKS STARTED IN FINANCIAL YEAR 2013-14, AND CERTIFICATE WAS ISSUED BY KATANKALATHU R PANCHAYAT UNION ON 31.03.2006 REFERRING AS 'GROUP DEVELOPMENT MULTI-ST ORIED BUILDING AND COMMERCIAL BUILDING'. THE LD. AR SUBMITTED THAT TH E COMMERCIAL PROJECT IN BLOCK NO. 6 WAS PROGRESSED IN THE YEAR 2013-14, WHEREAS, THE RESIDENTIAL BLOCKS CONSTRUCTION WAS COMPLETED ON 28.08.2009. THE ASSE SSEE HAS FAILED TO COMPLY :-5-: I.T.A. NO. 2267/MDS/2016 THE CONDITION OF PROVISIONS OF SECTION 80 IB (10) B EFORE 31.03.2011 AS THE PROJECT IS INCOMPLETE AND COMPLETION CERTIFICATE WAS NOT SU BMITTED. FURTHER, BLOCK NO. 6 COMMERCIAL BUILT UP AREA EXCEEDING 3% OF CONSTRUCTI ON AREA AND CANNOT BE DELINKED FROM THE RESIDENTIAL PROJECT AND THE LD. A O RELIED ON JUDICIAL DECISION AND DISTINGUISHED THE CASE MENTIONING THE PLANNING PERMISSION WAS OBTAINED ON 27.03.2006 AND WITH ABOVE OBSERVATIONS DISALLOWED T HE CLAIM U/S. 80 IB (10) OF THE ACT AND ASSESSED THE TOTAL INCOME OF RS. 5,33,6 1,478/- AND PASSED ORDER U/S. 143(3) OF THE ACT DATED 30.03.2015. 5. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL WITH THE CIT(A). IN THE APPELLANT PROCEEDINGS, THE LD. AR OF THE ASS ESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS OF ASSESSMENT PROCEEDING S. WHERE THE LD. AO HAS ERRED IN DISALLOWING THE CLAIM U/S. 80 IB (10) OF T HE ACT WITHOUT APPRECIATING THE FACTS AND THERE IS NO VIOLATION OF TERMS AND CONDIT IONS AND COMMON PERMISSION WAS OBTAINED IN RESPECT OF THE COMMERCIAL BLOCK FRO M THE CMDA. THE LD. AO WITHOUT VERIFYING THE FACTS HAS DISALLOWED THE CLAI M AND THE LD. AR FILED WRITTEN SUBMISSIONS REFERRED BY LD. CIT(A) AT PAGE 2-3 OF T HE ORDER. FURTHER, THE LD. CIT(A) RELIED ON THE JUDICIAL DECISIONS ON THE COM PLETION OF CONSTRUCTION OF HOUSING PROJECTS AND PLACED RELIANCE ON THE HYDERAB AD TRIBUNAL DECISION DEALT AT PAGE NO. 6 TO 9 OF THE ORDER AND UNILATERALLY CONCL UDED THAT THE FURNISHING OF COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY IS MANDATORY AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM U/S. 80 IB (10) OF THE ACT :-6-: I.T.A. NO. 2267/MDS/2016 AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, THE LD. AR OF THE ASSESSEE ARGUED THE GROUNDS AND SUBMITTED THAT PROJECT COMPLETION CERTIFICATE FROM COMPETENT AUTHORITY IS REQUIRED TO BE SUBMITTED FOR CLAIM OF DEDUCTION U/S . 80 IB (10) OF THE ACT. THE ASSESSEE COMPANY HAS COMPLETED THE PROJECT WITHIN S TIPULATED TIME AND FILED WRIT PETITION IN HON'BLE HIGH COURT OF MADRAS AND HON'BL E COURT HAS DIRECTED THE MEMBER SECRETARY, CMDA TO GRANT THE COMPLETION CERT IFICATE. THE ASSESSEE COMPANY HAS OBTAINED COMPOSITE PERMISSION FOR COMME RCIAL BLOCK AND RESIDENTIAL BLOCK. WHEREAS, BLOCK NO. 6 IS A COMME RCIAL BLOCK AND NO CONSTRUCTION WAS TAKEN UP AND ONLY DURING THE FINAN CIAL YEAR 2013-14 THE CONSTRUCTION WAS STARTED. THE LD. CIT(A) HAS CONSI DERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF ASSESSEE AND O BSERVED AT PARA 4.2 OF HIS ORDER ON THE PROVISIONS OF SECTION 80 IB (10) OF TH E ACT AND PRE-REQUISITE CONDITIONS OF OBTAINING THE COMPLETION CERTIFICATE AND RELIED ON JUDICIAL DECISIONS. THE ASSESSEE HAS RAISED THE GROUND BEFORE CIT(A) IN RESPECT OF COMMERCIAL BUILDING, WHERE, COMMERCIAL BUILDING WAS CONSTRUCTE D WITH RESIDENTIAL BLOCK IT HAS TO BE TREATED INDEPENDENTLY. THE LD. CIT(A) HAS NO T GIVEN ANY FINDINGS / ADJUDICATED ON FACTS ON PROPORTIONATE DEDUCTION TO BE ALLOWED IN RESPECT TO RESIDENTIAL BLOCK BUILDING AND THE ORDER OF CIT(A) IS SILENT ON THIS ISSUE. CONTRA, THE LD. DR RELIED ON THE ORDER OF THE LOWER AUTHORI TIES AND ALSO EMPHASIZED ON THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER WHERE THE ASSESSEE :-7-: I.T.A. NO. 2267/MDS/2016 HAS NOT COMPLIED WITH THE REQUISITE NECESSARY CONDI TIONS FOR CLAIM I.E., COMPLETION CERTIFICATE FROM LOCAL AUTHORITY, AND OB TAINED COMMON PERMISSION FOR COMMERCIAL AND RESIDENTIAL BLOCKS AND OPPOSED THE G ROUNDS.. 7. FURTHER, THE LD. AR REPLIED TO THE SUBMISSIONS O F THE LD. DR THAT THE ASSESSEE HAS COMPLETED THE PROJECT AND COMPLIED THE CONDITIONS AND THE LD. AO HAS DENIED DEDUCTION U/S. 80 IB (10) OF THE ACT AND FURTHER THE LD. AR DEMONSTRATED BEFORE US THAT THE CIT(A) HAS NOT GIVE N ANY FINDING ON GROUND RAISED IN RESPECT OF COMMERCIAL PROPERTY BLOCK NO. 6 AND DISPOSED OFF THE APPEAL AND PRAYED FOR ALLOWING THE GROUNDS OF ASSESSEE APP EAL. 8. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL ON RECORD, JUDICIAL DECISIONS CITED ON DEDUCTION U/S. 80 IB (1 0) OF THE ACT. THE ASSESSING OFFICER DENIED DEDUCTION U/S. 80 IB (10) OF THE ACT FOR NON-COMPLIANCE OF THREE ESSENTIALS REQUIREMENTS (I) PRODUCTION OF COMPLETIO N CERTIFICATE, (II) ELIGIBILITY OF HOUSE BUILDING PROJECT WERE STRUCTURE OF COMMERCIAL PROJECT EXCEEDED 3% OF TOTAL CONSTRUCTED AREA, AND (III) CMDA PERMISSION F OR RESIDENTIAL AND COMMERCIAL PROJECT, WHERE COMMERCIAL PROJECT STARTED IN THE FI NANCIAL YEAR 2013-14. THE LD. AR ARGUED THAT THE ASSESSEE HAS SOUGHT ORDERS FROM HON'BLE HIGH COURT OF MADRAS DIRECTING CMDA TO ISSUE COMPLETION CERTIFICA TE AND THE LD. CIT(A) HAS OVERLOOKED THE FACTUAL ASPECTS. WE CONSIDERED THE F INDINGS OF THE LD. CIT(A), WERE THE ASSESSEE HAS RAISED THE DISPUTED GROUNDS B EFORE THE CIT(A) ON :-8-: I.T.A. NO. 2267/MDS/2016 COMPLETION CERTIFICATE AND CLAIM OF DEDUCTION ON CO MPOSITE PLANNING PERMISSION OF RESIDENTIAL AND COMMERCIAL BLOCK. WE FOUND THE CIT(A) DISCUSSED ON THE COMPLETION CERTIFICATE RELYING ON JUDICIAL DECISION S AND HAS NOT GIVEN ANY COMMENTS OR FINDINGS ON COMPOSITE PLANNING DEDUCTIO N U/S. 80 IB (10) OF THE ACT. THE LD. AR DREW OUR ATTENTION TO GROUND NO. 4 RAISED BEFORE THE CIT(A), WHICH READ AS UNDER: ' THE ITO FAILED TO APPRECIATE THAT THE CONDITIONS PRESCRIBED FOR THE ELIGIBILITY TO MAKE THE CLAIM FOR DEDUCTION IN THE COMPUTATION OF TAXABLE TOTAL INCOME WERE FULFILLED INDEPENDENTLY AS WELL AS CONCURRENTLY ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND OUG HT TO HAVE APPRECIATED THAT THE ISSUE RELATING TO FURNISHING OF THE COMPLETION CERTIFICATE AND THE UNDERSTANDING OF THE COMPOSITE PLANNING PERMISSION INCLUDING THE COMMERCIAL BLOCK WHILE CONSIDERING T HE CLAIM FOR DEDUCTION U/S. 80 IB (10) OF THE ACT TECHNICAL IN NATURE.' ON FURTHER PERUSAL OF THE ORDER OF APPELLATE AUTHOR ITY, THERE IS NO FINDING BY THE LD. CIT(A) WHETHER THE DEDUCTION HAS TO BE ALLOWED ON COMMON COMPOSITE PERMISSION OBTAINED INCLUDING COMMERCIAL BLOCK. CON SIDERING THE APPARENT FACTS, PROVISIONS OF LAW AND LEGAL GROUND RAISED BY THE AS SESSEE, WE ARE OF THE OPINION THAT THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION U/S . 80 IB (10) OF THE ACT AND OBTAINED COMMON PERMISSION FOR COMMERCIAL BLOCK WHI CH WAS NOT CONSIDERED BY THE LD. CIT(A) AND PASSED THE DISMISSAL ORDER. IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF CIT(A) AND REMIT THE ENTIRE DISP UTED ISSUE TO THE FILE OF THE CIT(A) TO ADJUDICATE THE GROUND RAISED BY THE ASSE SSEE DISCUSSED ABOVE AND :-9-: I.T.A. NO. 2267/MDS/2016 PASS A SPEAKING ORDER, NEVERTHELESS TO STATE THAT T HE ASSESSEE SHOULD BE PROVIDED WITH ADEQUATE OPPORTUNITY OF HEARING BEFOR E DISPOSAL OF APPEAL ON MERITS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 14TH DAY OF DECE MBER, 2016 AT CHENNAI. S D / - ( . ) (ABRAHAM P. GEORGE) ! / ACCOUNTANT MEMBER S D / - ( . ) (G. PAVAN KUMAR) $ ! /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 14TH DECEMBER, 2016 JPV ) ,%56 76 /COPY TO: 1. ( /APPELLANT 2. ,-( /RESPONDENT 3. 8 ( )/CIT(A) 4. 8 /CIT 5. 6 ,%% /DR 6. /GF.