ACIT 24(1), MUMBAI V. CHAMUNDA BUILDERS & DEVELOPERS, MUMBAI

ITA 2390/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3357 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Commercial expediency
• Section: 80IB

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 2390/MUM/2018 (ASSESSMENT YEAR 2013-14 ) ACIT-24(1), R.NO. 604, 6 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI-400012. VS. M/S CHAMUNDA BUILDERS & DEVELOPERS, 111, CHAMUNDA HERITAGE, BEHIND JIVAN VIKASH HOSPITAL, JIJAMATA ROAD KOLDONGRI, ANDHERI EAST, MUMBAI-400069. PAN: AAAFC4837H APPELLANT RESPONDE NT APPELLANT BY : SHRI PRAMOD NIKALJE (DR) RESPONDENT BY : SHRI BHUPENDRA SHAH (AR) DATE OF HEARING : 23.04.2019 DATE OF PRONOUNCEMEN T : 23.04.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME- TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)- 36, MUMBAI [HEREINAFTER REFERRED AS LD. CIT(A)] DAT ED 22.01.2018 FOR ASSESSMENT YEAR 2013-14. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING THE BENEFIT OF DEDU CTION U/S 80IB OF THE ACT TO THE ASSESSEE NOTWITHSTANDING THAT THE ASSESSEE D ID NOT SATISFY THE PROVISIONS LAID DOWN IN CLAUSES (E) AND (F) OF THE SECTION 80IB(10) OF THE ACT.' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) ERRED IN NOT CONSIDERING SIMILAR ISSUE CONSI DERED BY HON'BLE ITAT, ITA NO. 2390 MUM 2018-M/S CHAMUNDA BUIL DERS & DEVELOPERS 2 MUMBAI, IN THE CASE OF M/S EVEREST HOME CONSTRUCTIO N (INDIA) (PVT.) LTD. ON THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IB( 10)(D) OF THE INCOME TAX ACT.' 3. 'WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED DELETING THE ADDITION OF RS. 30,000/- ON ACCOUNT OF INTEREST ON INTEREST FREE LOANS OF RS. 2,50,000/-, WITHOUT APPR ECIATING THAT THE ASSESSEE COULD NOT EITHER PROVE THE NEXUS OF THESE INTEREST FREE LOANS WITH THE SURPLUS INTEREST FREE FUNDS LYING WITH IT, OR ESTABLISH ANY COMMERCIAL EXPEDIENCY TO EXTEND SUCH LOANS AS FREE OF INTEREST.' 2. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT ALL THE GROUNDS OF APPEAL RAI SED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF THE T RIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 26 04/MUM/2017 DATED 21.01.2019. THE LD. AR OF THE ASSESSEE FURTHE R SUBMITS THAT GROUND NO. 1 & 2 RELATES TO DEDUCTION UNDER SECTION 80IB A ND GROUND NO.3 RELATES TO INTEREST DISALLOWANCE. THE LD. AR OF THE ASSESSEE SUBMITS THAT ON GROUNDS OF APPEAL, THE APPEAL OF REVENUE FOR ASS ESSMENT YEAR 2012- 13 WAS DISMISSED VIDE ITA NO. 2604/MUM/2017 DATED 21.01.2019. THE LD. AR OF THE ASSESSEE FURNISHED THE COPY OF DECISI ON OF TRIBUNAL AS STATED ABOVE. 3. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE HAVE NO TED THAT THE SIMILAR DEDUCTION UNDER SECTION 80IB WAS DISALLOWED BY ASSE SSING OFFICER FOR ITA NO. 2390 MUM 2018-M/S CHAMUNDA BUIL DERS & DEVELOPERS 3 ASSESSMENT YEAR 2012-13. HOWEVER, ON APPEAL BEFORE THE LD. CIT(A), THE DEDUCTION WAS ALLOWED AND ON APPEAL BEFORE THE TRIBUNAL, THE APPEAL OF REVENUE WAS DISMISSED WITH THE FOLLOWING ORDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT A SIMILAR ISSUE HAS BEEN DECID ED IN FAVOUR OF THE ASSESSEE IN OM SWAMI SMARAN DEVELOPERS PVT. LTD. (SUPRA). TH E TRIBUNAL VIDE ORDER DATED 31.01.2018 HELD AS UNDER: 8. WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS COULD BE SEEN FROM THE FACTS AVAILABLE O N RECORD, THE ASSESSEE HAS DEVELOPED A HOUSING PROJECT UNDER THE SLUM REHABILI TATION SCHEME OF THE GOVERNMENT. IT IS ALSO A FACT THAT IN THE IMPUGNED ASSESSMENT YEAR FOR THE FIRST TIME, THE ASSESSEE HAD OFFERED PROFIT FROM TH E SAID HOUSING PROJECT AMOUNTING TO RS. 1,48,66,701/- AND HAS CLAIMED DEDU CTION THEREOF UNDER SECTION 80IB(10) OF THE ACT. THERE IS NO DISPUTE TH AT THE ASSESSEE HAS SOLD THREE FLATS TO A SINGLE INDIVIDUAL IN THE SAID HOUS ING PROJECT. THE ASSESSING OFFICER HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTIO N ALLEGING VIOLATION OF CONDITIONS OF CLAUSE(F) OF SECTION 80IB(10) OF THE ACT, WHICH PROVIDES THAT MORE THAN ONE RESIDENTIAL UNIT IN A HOUSING PROJECT CANNOT BE SOLD TO A PERSON / INDIVIDUAL. THE FACTUAL MATRIX OF THE CASE REVEALS THAT EXCEPT VIOLATION OF CONDITIONS OF CLAUSE(F) OF SECTION 80 IB(10) OF THE ACT, IN THE SENSE THAT THE ASSESSEE HAS SOLD THREE FLATS TO A S INGLE INDIVIDUAL, THERE IS NO ALLEGATION BY THE DEPARTMENTAL AUTHORITIES THAT ANY OTHER CONDITIONS OF SECTION 80IB(10) OF THE ACT IN RESPECT OF ANY OTHER FLATS OF THE HOUSING PROJECT ARE VIOLATED. THUS, THE ISSUE BEFORE US IS WHETHER FOR VIOLATION OF THE CONDITIONS OF CLAUSE(F) OF SECTION 80IB(10) OF THE ACT IN RESPECT OF TWO FLATS, ASSESSEES CLAIM OF DEDUCTION IN RESPECT OF ENTIRE HOUSING PROJECT CAN BE DISALLOWED. IN OUR VIEW, READING THE PROVISIONS OF SECTION 80IB(10) AS A WHOLE AND THE LEGISLATIVE INTENT / OBJECT BEHIND IN TRODUCING SUCH PROVISION INTO THE STATUTE WOULD REVEAL THAT IT IS A BENEFICI AL PROVISION INTRODUCED BY THE LEGISLATURE TO DEAL WITH THE HOUSING PROBLEM. T HUS, SUCH PROVISION HAS TO BE CONSTRUED LIBERALLY. UNDISPUTEDLY, EXCEPT VIOLAT ION OF CONDITIONS OF CLAUSE(F) OF SECTION 80IB(10) OF THE ACT IN RESPEC T OF TWO FLATS, ALL OTHER ITA NO. 2390 MUM 2018-M/S CHAMUNDA BUIL DERS & DEVELOPERS 4 CONDITIONS OF SECTION 80IB(10) OF THE ACT ARE FULFI LLED IN RESPECT OF THE HOUSING PROJECT WHICH IS EVIDENT FROM THE FACT THAT THERE IS NO OTHER ALLEGATION MADE BY THE ASSESSING OFFICER. THEREFORE , IN OUR VIEW, FOR VIOLATION OF CONDITIONS OF CLAUSE(F) OF SECTION 80 IB(10) OF THE ACT IN RESPECT OF TWO FLATS, THE DEDUCTION FOR THE ENTIRE HOUSING PROJECT OR IN RESPECT OF OTHER FLATS WHICH OTHERWISE ARE COMPLYING TO THE CONDITIONS OF SECTION 80IB(10) CANNOT BE DISALLOWED. THE DISALLOWANCE, IF ANY, HAS TO BE RESTRICTED TO THE FLATS WHICH VIOLATE THE CONDITIONS OF SECTIO N 80IB(10). THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S BRAMHA ASSOCIA TES, 333 ITR 289, HAS HELD THAT DEDUCTION UNDER SECTION 80IB(10) CAN BE A LLOWED ON PROPORTIONATE BASIS IN RESPECT OF FLATS WHICH FULFILLED THE CONDI TIONS OF SECTION 80IB(10). THE SAME VIEW WAS EXPRESSED BY THE HON'BLE MADRAS H IGH COURT IN THE DECISIONS CITED BY THE LEARNED AUTHORISED REPRESENT ATIVE. IN OUR VIEW, THE RATIO LAID DOWN IN THE AFORESAID DECISIONS, M/S CHA MUNDA BUILDERS ITA NO. 2604/MUM/2017 6 THOUGH, ARE IN THE CONTEXT OF CLAUS E (C) OF SECTION 80IB(10) OF THE ACT, HOWEVER, THEY WILL APPLY TO TH E FACTS OF THE PRESENT CASE AS THERE IS NOT MUCH DIFFERENCE IN THE OBJECT FOR W HICH SECTION 80IB(10) WAS INTRODUCED, EVEN AFTER INTRODUCTION OF CLAUSE(E) A ND (F) TO SECTION 80IB(10) BY FINANCE ACT, 2009. THEREFORE, APPLYING THE RATIO LAID DOWN IN THE DECISIONS CITED BEFORE US, WE HOLD THAT THE ASSESSE E WILL BE ENTITLED TO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT PROPORT IONATELY IN RESPECT OF FLATS WHICH FULFILLED ALL THE CONDITIONS OF SECTION 80IB(10) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO COM PUTE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. GROUND RAISED IS PARTL Y ALLOWED. 6.1 FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDE R OF THE CO-ORDINATE BENCH AND UPHOLD THE ORDER OF THE LD. CIT(A). THUS THE 1S T, 2ND AND 3RD GROUNDS OF APPEAL ARE DISMISSED. 5. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE, WHEREIN NO VARIATION IN THE FACTS, THEREFORE, CONSIDERING THE DECISION OF TRIBUNAL, THE GROUND NO(S) 1 & 2 OF THE APPEAL ARE DISMISSED. ITA NO. 2390 MUM 2018-M/S CHAMUNDA BUIL DERS & DEVELOPERS 5 6. GROUND NO.3 RELATES TO DELETING THE ADDITION OF RS. 30,000/- ON ACCOUNT OF INTEREST FREE LOAN OF RS. 2,50,000/-. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS ALSO COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 2604/MUM/2017 DATED 21.01.2019. 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIE D UPON THE ORDER OF ASSESSING OFFICER. 8. WE HAVE NOTED THAT ON SIMILAR FACTS, THE CO-ORDINAT E BENCH OF TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE FOR AY 2012-13 BY FOLLOWING THE DECISION OF RELIANCE UTILITY AND POWER [313 ITR 340 (BOM)]. THE COORDINATE BENCH CONFIRMED THE DELETION OF SIMILAR DISALLOWANCE FOR AY 2012-13 BY PASSING THE FOLLOWING ORDER: 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIALS ON RECORD. IN THE CASE OF CIT V. RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (BOM), IT HAS BEEN HELD THAT WHERE AN ASSESSEE IS H AVING OWN FUNDS MORE THAN THE INTEREST-FREE LOANS, IT SHOULD BE PRESUMED THAT INTEREST-FREE LOANS HAVE BEEN GIVEN OUT OF OWN FUNDS AND NO DISALLOWANC E OF INTEREST IS CALLED FOR. IN THE INSTANT CASE, THE ASSESSEE WAS HAVING M ORE OWN FUNDS THAN INTEREST-FREE LOANS. THEREFORE, FOLLOWING THE DECIS ION IN RELIANCE UTILITIES & POWER LTD . (SUPRA), WE UPHOLD THE ORDER OF THE LD. CIT(A). 9. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE ALMOST ON SIMILAR FACTS, WE DO NOT FIND ANY ILLEGALITY OR INF IRMITY IN THE ORDER PASSED BY LD. CIT(A). NO CONTRARY FACT TO TAKE OTHE R DECISION IS BROUGHT TO OUR NOTICE. THEREFORE, THE GROUND NO.4 OF THE AP PEAL IS ALSO DISMISSED. ITA NO. 2390 MUM 2018-M/S CHAMUNDA BUIL DERS & DEVELOPERS 6 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/04/2019. SD/- SD /- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 23.04.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI