RAMPRASAD AGARWAL, THANE V. ITO CEN RG, MUMBAI

ITA 2435/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8960 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATBIR SINGH
• Assessee Lawyers: DR K SHIVARAM

Judgement Text

PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI G. E. VEERABHADRAPPA, PRESIDENT, & SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 2435/MUM/2010 ASSESSMENT YEAR: 2006-07 SHRI RAMPRASAD AGARWAL GROUND FLOOR, VRINDAVAN, SALASAR BRIJBHOOMI, TEMBA HOSPITAL ROAD, BHAYANDAR (W), DIST. THANE-401 101 PAN NO: AAOPA 2405 P VS. THE ITO, CENTRAL RANGE, 1 ST FLOOR, PAWAR COMPOUND, CHERAI NAKA, THANE (W) (APPELLANT) (RESPONDENT) & ITA NO. 2163/MUM/2010 ASSESSMENT YEAR : 2006-07 ITO, (CENTRAL), THANE PAWAR INDUSTRIAL ESTATE, EDULJI ROAD, CHARAI, THANE-400 601 VS. SHRI RAMPRASAD AGARWAL GROUND FLOOR, VRINDAVAN, SALASAR BRIJBHOOMI, TEMBA HOSPITAL ROAD, BHAYANDAR (W), DIST. THANE-401 101 PAN NO: AAOPA 2405 P (APPELLANT) (RESPONDENT) APPELLANT BY : DR. K. SHIVARAM & SHRI RAHUL HAKANI RESPONDENT BY : SHRI SATBIR SINGH DATE OF HEARING: 21.08.2012 DATE OF PRONOUNCEMENT: 05.09.2012 O R D E R PER VIVEK VARMA, J.M. : SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 2 OF 9 THE CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE DEPARTMENT AGAINST THE ORDER OF CIT(A)-I, THANE, DATED 15.11.2 009. 2. THE ASSESSEE HAD FILED REVISED GROUNDS OF APPEAL VIDE LETTER DATED 23.11.2011, IN PLACE OF THE GROUNDS FILED ORIGINALL Y. WE, THEREFORE, PERUSE THE APPEAL ON THE REVISED GROUNDS OF APPEAL, WHICH ARE AS FOLLOWS :- I. ORIGINAL GROUND NOS. 1 & 2 1. THE LEARNED COMMISSIONER OF INCOME-TAX (A) FAILED T O APPRECIATE THAT THE APPELLANT HAD OBTAINED COMPLETION CERTIFICATE IN RE SPECT OF BUILDINGS ON WHICH DEDUCTION U/S.80IB(10) WAS CLAIMED THOUGH THE CONDITION OF OBTAINING BUILDING COMPLETION CERTIFICATE IS NOT AP PLICABLE TO THE APPELLANT S THE PROJECT COMMENCED PRIOR TO 1/4/2005 WHEN THE CONDITION TO OBTAIN BUILDING COMPLETION CERTIFICATE DID NOT EXIST AND H ENCE, DEDUCTION U/S 80IB(10) CANNOT BE DENIED TO THE APPELLANT. 1.1 WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT AS NO DEDUCTION U/S 80IB(10) WAS CLAIMED ON KRISHNA KUNJ A. WING, DEDUCTION U/S 80IB(10) CANNOT BE DENIED ON THE ENTI RE PROJECT. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. THE SOLE ISSUE, EMANATING FROM THE GROUNDS OF AP PEAL, AS ABOVE, PERTAIN TO THE DENIAL OF DEDUCTION U/S 80IB(10). THE BRIEF FACTS OF THE CASE ARE AS UNDER :- THE DEDUCTION IS DENIED BY THE A.O. FOR THE FOLLOW ING REASONS : I. THE PLAN IS APPROVED AS COMMERCIAL-CUM-RESIDENTIAL PROJECT. II. OCCUPATION CERTIFICATE IS NOT RECEIVED. III. EXISTENCE OF COMMERCIAL SPACE IN THE PROJECT. IV. BUILT UP AREA EXCEED 1000 SQ. FT. V. THE MATERIAL FACTS WHICH PROMPTED THE AC TO DISALLO W THE CLAIM , ARE DISCUSSED HEREUNDER : APPROVAL OF PLAN AS COMMERCIAL-CUM-RESIDENTIAL PROJ ECT THE ORIGINAL LARGER PLAN CONSISTING OF 23 BUILDINGS WERE APPROVED VIDE THE APPROVAL DATED 24/06/02 BY MIRA BHAYANDER MUNIC IPAL CORPORATION (MBMC) AS COMMERCIAL-CUM-RESIDENTIAL PROJECT. OUT OF THIS , THE APPELLANT CONSTRUCTED 3 BUILDINGS VIZ RADHA KUNJ , KRISHNA KUNJ AND GIN RAJ COMPRISING OF 1,00,930/- SQ FT OF CONSTRU CTED AREA INCLUDING 7947 SQ OF COMMERCIAL AREA. THE AC CAME TO THE CONC LUSION THAT, SINCE SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 3 OF 9 THE PROJECT WAS APPROVED AS COMMERCIAL-CUM-RESIDEN TIAL ONE , THE APPELLANT ASSESSEE WAS NOT ENTITLED FOR THE BENEFIT S OF DEDUCTION AND ACCORDINGLY, A SHOW CAUSE NOTICE DATED 15/12/08 REQ UIRING THE APPELLANT TO STATE HIS OBJECTION, IF ANY WAS ISSUED . THE APPELLANT RELYING UPON THE CLARIFICATION ISSUED BY THE CBDT TO MAHARA SHTRA CHAMBER OF HOUSING INDUSTRIES , EXPLAINED THAT ONCE THE PROJEC T IS APPROVED AS HOUSING PROJECT IT AMOUNTS TO APPROVAL AS HOUSIN G PROJECT. THE EXPLANATION OF THE APPELLANT WAS REJECTED BY THE AC AND RELYING UPON THE DECISION IN THE CASE OF M/S LAUKIK DEVELOPERS V S DCIT , CIRCLE-3 THANE , PROCEEDED TO HOLD THAT THE ASSESSEE HAVING FAILED TO FULFILL ONE OF THE CONDITIONS OF SECTION 801B(10) IS NOT ENTITL ED FOR THE SAME. THE EXCERPTS OF THE SUBMISSION ARE LIKE THIS : I. THE APPELLANT HAS CONSTRUCTED 3 BUILDINGS OUT OF 23 BUILDINGS APPROVED AS SALASAR BRIJBHOOMI. THE SAID PROJECT HAS FULFILLED ALL THE REQUISITE CONDITIONS. II. THE PLAN IS APPROVED ON 24/06/02 AND THE COMMENCEME NT CERTIFICATE IS ISSUED ON 28/5/03. III. THE AMENDMENT WHICH CAME IN TO EFFECT FROM 1.4. 04 WILL NOT APPLY THIS YEAR AND THEREFORE, COMPLETION, CERTIFIC ATE IS NOT NECESSARY. IV. THE LAND ON WHICH THE PROJECT CONSTRUCTED IS MORE T HAN ONE ACRE IN AREA.THE NEWLY INSERTED CONDITION OF THE PR OJECT TO BE COMPLETED WITHIN YEARS IS NOT APPLICABLE TO THIS CA SE, SINCE THE PROJECT IS APPROVED PRIOR TO 3 1/03/04. V. THE CONSTRUCTED AREA HAS NOT EXCEEDED 1000 SQ FT IN EACH RESIDENTIAL UNIT. VI. THE CONVENIENT SHOPPING IS PROVIDED AS PR DEVE LOPMENT CONTROL REGULATIONS OF MBMC. VII. THE PROJECT OF THE APPELLANT, HOWEVER, IS A HOUSING PROJECT, WITHIN THE MEANING OF CLARIFICATION ISSUED BY THE C BDT TO MAHARASHTRA CHAMBER T HOUSING INDUSTRIES (MCHI). THE RESTRICTION ON SHOPPING AREA IS LESS THAN 2000 SQ FT ARE 5 % WILL APPLY TO THE PROJECT APPROVED AFTER 01/04/04 N OT TO THE PROJECT OF THE APPELLANT. IX. THE AO HAS RELIED UPON THE DECISIONS IN THE CA SE OF M/S LAUKIK DEVELOPERS VS DCIT, CIRCLE-3, THANE HOWEVER, HE HAS IGNORED THE DECISION LIKE BENGAL AMBUJA HOUSING. X. THE DECISION IN THE CASE OF M/S BRAHMA ASSOCIAT ES HAS OVER- RULED THE DECISION IN THE CASE OF M/S LAUKIK DEVELO PERS. XI. THE DECISION OF ITAT, MUMBAI IN THE CASE OF AC IT VS SHETH DEVELOPERS PVT LTD IS SQUARELY APPLICABLE AND PROPO RTIONATE ALLOWANCE BE GIVEN, IF NOT FULL DEDUCTION, IF THE C ONSTRUCTED AREA IS TAKEN TO EXCEED 1000 SQ. FT. 4.3 IN RESPECT OF THE ABOVE SUBMISSIONS, THE APPELL ANT HAS RELIED UPON THE DECISIONS IN THE FOLLOWING CASES : I. SHRI HARSHAD P. DOSHI VS. DCIT, MUMBAI. II. ITO VS. M/S. IDEAL REALTORS III. M/S. SAROJ SALES CORPORATION VS. DCIT, MUMBAI. SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 4 OF 9 IV. POONAM GRIH NIRMAN VS. ACIT, MUMBAI V. BENGAL AMBUJA HOUSING LTD. VS. DCIT. 4. THE CIT(A), WHILE ACCEPTING THE CONTENTIONS OF T HE ASSESSEE, DENIED THE DEDUCTION ON THE GROUND THAT OC (OCCUPATION CERTIFI CATE) HAD NOT BEEN RECEIVED AND SINCE ONE OF THE MAIN CONDITION EMBEDDED IN SEC TION 80IB(10)(A)(II) HAD NOT BEEN FULFILLED, THE DEDUCTION COULD NOT BE ALLO WED. AGGRIEVED THE ASSESSEE IS NOW BEFORE THE ITAT. 5. BEFORE US, THE AR REITERATED THE SUBMISSIONS MAD E BEFORE THE REVENUE AUTHORITY AND SUBMITTED THAT THE PROVISIONS FOR COM PLETION CERTIFICATE WAS NOT THERE IN THE STATUTE AND SINCE THE PROJECT HAD BEEN APPROVED PRIOR TO 31.03.2005 NEWLY INSERTED PROVISIONS WERE NOT APPLI CABLE. 6. THE AR RELIED ON THE DECISIONS OF ITO V/S. SAI K RUPA DEVELOPERS IN ITA NO. 3661/MUM/2011, (WHERE ONE OF US WAS PARTY) TO T HE ORDER, WHEREIN IT WAS HELD, REGARDING COMPLETION CERTIFICATE, RELIANCE WAS PLAC ED ON THE DECISION OF ITAT IN THE CASE OF M/S. SAROJ SALES ORGANISATION, 115 TTJ 485. IT WAS SUBMITTED THAT AS PER SECTION 80IB(10), WHICH IS APPLICABLE IN RES PECT OF THE HOUSING PROJECTS APPROVED BEFORE 31.03.2005, THERE WAS NO REQUIREMEN T OF OBTAINING COMPLETION CERTIFICATE. RELIANCE WAS PLACED ON THE DECISION O F ITAT MUMBAI IN THE CASE OF HIRANANDANI AKRUTI VS. DCIT, 39 SOT 498, WHEREIN, T HE RATIO OF DECISION IN THE CASE OF SAROJ SALES CORPORATION WAS FOLLOWED, WHICH IS AS UNDER :- WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING ANY W ORDS TO THE STATUTE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE Y. 2 001-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE, THE SUBMISSIONS OF THE LEARNED D.R. IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF SEC.80IB( 10) AS AMENDED BY THE FINANCE ACT, 2005, LU.E.FO1.4.2005. WE, THEREFORE, HOLD FOLLOWING DECISION IN THE CASE OF SAROJ SALES ORGANIZATION (SUPRA) THAT T HE LAW AS EXISTED IN THE A.Y. SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 5 OF 9 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FO R SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17.11.2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO B E APPLIED. 6.1 THE AR ALSO RELIED ON THE DECISION OF ACIT VS S HETH DEVELOPERS IN ITA NO. 4497/MUM/2006, REPORTED IN 33 SOT 277 (MUM), WH EREIN THE COORDINATE BENCH AT MUMBAI ITAT HELD, WHETHER DEFINITION OF BUILT-UP AREA IN CLAUSE (A) OF SECTION 80-IB(14) INTRODUCED BY FINANCE ACT, 200 4 HAS ONLY PROSPECTIVE EFFECT FROM 1-4-2005 HELD, YES WHETHER, THEREFORE, PRI OR TO 1-4-2005 BALCONY WOULD NOT FORM PART OF BUILT UP AREA, IRRESPECTIVE OF AREA OF SUCH BALCONY HELD, YES- WHETHER ADOPTING A DEFINITION FORMULATED IN A REGULATION PROMULGATED BASED ON A STATE LAW, THAT TOO RELEVANT ONLY FOR LI MITED LOCALIZED AREA, CANNOT BE A BASIS FOR UNDERSTANDING A COMMON TERM LIKE BUILT -UP AREA FOR PURPOSE OF ACT AND APPLICATION OF SECTION 80-IB THEREOF HELD, YE S WHETHER EVEN WHERE SOME OF UNITS IN A HOUSING COMPLEX EXCEED AREA LIM IT, RELIEF HAS TO BE GIVEN ON A PRO RATA BASIS. 6.2 THE AR FURTHER RELIED ON THE THIRD MEMBER DECIS ION OF COORDINATE BENCH AT CHENNAI IN THE CASE OF SANGHVI & DOSHI ENTERPRIS E VS INCOME-TAX OFFICER REPORTED IN 131 ITD 151 THAT OC WOULD RELATE BACK T O THE DATE OF APPLICATION. THEREFORE, IN THE INSTANT CASE, THE COMMENCEMENT AP PLICATION WAS MADE ON 28.05.2003, WHICH WAS MUCH PRIOR TO 31.03.2008. 6.3 THE AR ALSO RELIED ON THE DECISION OF SAROJ SAL ES ORGANISATION V/S ITO IN ITA NO. 4008/MUM/2007, REPORTED IN 115 TTJ 485, (WH ERE ONE OF US WAS A PARTY) TO THE DECISION, HELD, ASSESSEE HAVING COMPLETED THE CONSTRUCTION OF SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 6 OF 9 VARIOUS WINGS OF THE BUILDING UNDER THE APPROVED PL AN IN TWO DIFFERENT BLOCKS UNDER DIFFERENT CERTIFICATES OF COMMENCEMENT WAS EL IGIBLE FOR DEDUCTION UNDER SEC.80IB(10) IN RESPECT OF ONE BLOCK IN RESPECT OF WHICH CLAIM FOR DEDUCTION WAS MADE AND WHICH SATISFIED THE REQUIREMENT OF S 80IB( 10): CLAIM COULD NOT BE DENIED BY CLUBBING THE TWO BLOCKS ESPECIALLY WHEN T HE SECOND BLOCK HAD BEEN KEPT SEPARATE BY THE ASSESSEE AND FOR WHICH DEDUCTI ON UNDER S.80-IB(10) WAS NOT CLAIMED. 6.4 THE AR RELIED ON A NUMBER OF DECISIONS RENDERED BY VARIOUS COORDINATE BENCHES AND CONCLUDED THAT THE DEDUCTION U/S 80IB(1 0) CANNOT BE DENIED BY THE REVENUE AUTHORITIES. 7. THE DR ON THE OTHER HAND, STRONGLY SUPPORTED THE DECISION OF THE REVENUE AUTHORITY AND SUBMITTED THAT THE ENTIRE BUS INESS OF DEVELOPMENT WRESTS ON THE OC AND IF OC, AS PER THE SUBMISSIONS OF THE AR IS NOT REQUIRED, THE WHOLE PROVISION OF SECTION 80IB(10) SHALL BE RENDER ED OTIOS. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAD UNDERTAKE N THE DEVELOPMENT OF A PART OF DEVELOPMENT PROJECT OF 23 BUILDINGS AT MIRA BHAY ENDER AREA. THE ASSESSEE WAS TO CONSTRUCT 3 BUILDINGS AGGREGATING RS. 1,00,9 30 SQ. FEET INCLUDING 7947 SQ. FT. OF COMMERCIAL AREA. THE APPROVAL OF THE ENT IRE PROJECT WAS DATED 24.06.2002. THE CONTROVERSY IS WITH REGARD TO THE A LLOWABLE OF DEDUCTION U/S.80IB(10) ON THE PROJECT WHICH HAS NOT GOT THE O C BUT HAS COMPLETED THE PROJECT. WHEN WE REFER TO THE CIT(A), THE REASON AS SIGNED FOR NON ALLOWANCE IS SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 7 OF 9 THAT COMPLETION CERTIFICATE NOT ACQUIRED BY THE ASS ESSEE. THE AR HAS CITED THE THIRD MEMBER DECISION OF SANGHVI & DOSHI ENTERPRISE S VS ITO, REPORTED IN 131 ITD 151, WHERE AT PAGE 181, THE HON'BLE THIRD MEMBE R HAD OBSERVED THAT . AND, THEREFORE, THE CERTIFICATES RELATE BACK TO THE DATES ON WHICH THE APPLICATIONS FOR THE CERTIFICATES WERE MADE BY THE ASSESSEE. THEREFORE, REJECTING THE CLAIM ON THIS GROUND CANNOT SURVIVE. THE DEDUCTION, AS CLAIMED HAS TO BE ALLOWED. WE, THEREFORE, SET ASIDE THE ORD ER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE DEDUCTION AS CLAIMED. THE APPEAL IS THUS ALLOWED. 9. IN THE CROSS APPEAL, THE ISSUE RAISED BY THE DEP ARTMENT REVOLVES AROUND THE ALLOWANCE OF DEDUCTION U/S 80IB(10), BUT FROM A DIFFERENT ANGLE, I.E. SOME OF THE FLATS EXCEEDED 1000 SQ. FT. THIS ISSUE HAS BEE N DEAL WITH BY THE CO-ORDINATE BENCH AT MUMBAI IN THE CASE OF SAROJ SALES ORGANISA TION V/S ITO REPORTED IN 115 TTJ 485 (MUMBAI), HIRANANDANI AKRUTI J V V/S DC IT, REPORTED IN 39 SOT 498 (MUM) AND ALSO BY THE SPECIAL BENCH IN THE CASE OF BRAHAM ASSOCIATES, REPORTED IN 119 ITD 255 (PUNE SB), WHEREIN THE COOR DINATE BENCHES HAVE HELD THAT FOR THE PROJECTS APPROVED PRIOR TO 01.04.2005, OLD LAW SHALL APPLY. 10. RESPECTFULLY, FOLLOWING THE DECISIONS, WE DISMI SS THE APPEAL FILED BY THE DEPARTMENT, AS THE FLATS WHOSE MEASUREMENTS WERE TA KEN TO BE EXCEEDING 1000 SQ. FT. INCLUDED THE BALCONY, WHICH HAD TO BE EXCLU DED FOR THE MEASUREMENT. IN THESE CIRCUMSTANCES, WE DISMISS THE APPEAL. SHRI RAMPRASAD AGARWAL I.T.A. NOS. 2435 & 2163/MUM/2010 PAGE 8 OF 9 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 2435/MUM/2010 IS ALLOWED THE APPEAL FILED BY THE DEPARTMENT IN ITA NO. 2163/MUM/2010 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 05/09/2012. SD/- (G.E. VEERABHADRAPPA) PRESIDENT SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 05/09/2012 ROSHANI COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY/ ASST.REGISTRAR,ITAT MUMBAI.