M/S SEAWARD DEVELOPERS (P) LTD., PANVEL V. ITO, WARD - 7(2)(2), MUMBAI

ITA 2583/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4322 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBEY
• Assessee Lawyers: A K SHARMAAR
• Keywords: Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 115JB; 80IB; 148

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI E BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.2583/M/2013, /ASSESSMENT YEAR-2006-07 M/S. SEAWARD DEVELOPERS (P) LTD. C/O., SAJID MURGHEY,7/14,BUSHRA PARK 52-BUNGLOW AREA,PANVEL-410 206 PAN:AAICS 4655 E VS INCOME TAX OFFICER WARD-7(2)(2)AAYAKAR BHAVAN MAHARSHI KARVE MARG MUMBAI-400 020. ( / APPELLANT) ( / RESPONDENT) /.ITA NO.2545/M/2013, /ASSESSMENT YEAR-2009-10 INCOME TAX OFFICER WARD-7(2)(2), MUMBAI. VS M/S. SEAWARD DEVELOPERS (P) LTD. PANVEL-410 206. ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : SHRI A.K. SHARMA-AR / REVENUE BY : S/ SHRI SACHIDANAND DUBEY AND AARSI PRASAD (DR) / DATE OF HEARING : 16-11 -2015 / DATE OF PRONOUNCEMENT : 01.01.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) !# $% PER RAJENDRA, AM - CHALLENGING THE ORDERS OF CIT(A)-13, MUMBAI THE ASS ESSEE AND THE ASSESSING OFFICER (AO) HAVE FILED APPEALS FOR THE ABOVE MENTIONED TWO ASSESSMEN T YEARS (AY.S). ITA2583/M/13-AY06-07 ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF CIVI L CONSTRUCTION.THE RETURN WAS PROCESSED U/S. 143(1)OF THE ACT.LATER ON IT WAS SELECTED FOR SCRUT INY, AND ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 22.12.2008.THE AO RE-OPENED THE MATTER BY ISSUING A NOTICE U/S. 148 AND THE ASSESSMENT U/S.143(3) R.W.S 147 OF THE ACT WAS COMP LETED ON 22.11.2011,DETERMINING THE INCOME OF THE ASSESSEE AT RS.18.87 LACS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT REOPENING OF TH E ASSESSMENT.DURING THE RE-ASSESSMENT PROCEEDINGS,THE AO OBSERVED THAT THE ASSESSEE WAS F OLLOWING PROJECT COMPLETION METHOD, THAT IT HAD CLAIMED DEDUCTION U/S. 80IB OF THE ACT AMOUNTIN G TO RS.18,87,195/-.THE AO DIRECTED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM U/S. 80IB.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, FILED ON 11.11.2011,THE AO HELD THAT THE CLAIM MADE BY TH E ASSESSEE WAS NOT ALLOWABLE AS IT HAD NOT COMPLIED WITH FOUR CONDITIONS,THAT IT WAS NOT OWNIN G THE PLOT OF LAND WHERE THE HOUSING PROJECT WAS CONSTRUCTED,THAT THE AREA OF THE PLOT WAS LESS THAN ONE ACRE,THAT IT HAD NOT PRODUCED ANY EVIDENCE SUPPORTING THE CLAIM THAT AREA OF THE PLOT OF LAND WAS MORE THAN ONE ACRE,THAT THE PROJECT WAS NOT COMPLETED WITHIN THE TIME FRAME STI PULATED UNDER PROVISIONS OF SECTION 80IB OF THE ACT,THAT THE ASSESSEE WAS NOT A DEVELOPER OF T HE PROJECT IN HAND, THAT LOCAL AUTHORITIES HAD NOT GIVEN APPROVAL IN THE NAME OF THE ASSESSEE.FINALLY, HE REJECTED THE CLAIM MADE BY THE ASSESSEE COMPANY. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS ARGUED THAT THE AS SESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT,THAT THE AO HAD ACCEPTED THE CLAIM MADE U/S.80I B DURING THE ORIGINAL ASSESSMENT PROCEEDI - 2583&2545/M/13 SEAWARD DEVELOPERS-06-07 2 NGS,THAT HE HAD CONSIDERED ALL THE NECESSARY DOCUME NTS-AUDIT REPORT, DEVELOPMENT AGREEMENT, THAT THE AO HAD AFTER APPLICATION OF MIND ALLOWED D EDUCTION U/.S.80IB,THAT THE ASSESSEE HAD FILED VARIOUS DETAILS ON 3.12.2008,8.12.2008 AND 15.12.20 08, THAT DETAILS LIKE DEVELOPMENT AGREEMENT, VALUATION OF WORK IN PROGRESS,EXPENDITURE INCURRED WERE MADE AVAILABLE TO THE AO, THAT THE REASONS RECORDED BY THE AO FOR RE-OPENING OF THE AS SESSMENT WERE NOT SUFFICIENT FOR INVOKING THE PROVISIONS OF SECTION 147,THAT THE RE-OPENING WAS B AD IN LAW. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER,THE FAA HELD THAT THERE WERE VARIOUS CONDITIONS FOR ALLOWING DEDUCTIO N U/S. 80IB,THAT ONE OF THE CONDITIONS WAS THAT THE PROJECT SHOULD HAVE BEEN COMPLETED WITHIN FOUR YEARS FROM THE APPROVAL GRANTED BY THE LOCAL AUTHORITIES,THAT DURING THE ORIGINAL ASSESSME NT PROCEEDINGS THE AO HAD NOT EXAMINED THE ISSUE OF COMPLETION OF PROJECT WITHIN PERIOD OF FOU R YEARS,THAT CONSIDERING THE ABOVE FACT IT COULD NOT BE FOUND THAT THE AO HAD FORMED AN OPINION ON T HE ISSUE,THAT THE RE-OPENING WAS NOT RESULT OF CHANGE OF OPINION BY THE AO,THAT THE ORIGINAL ASSES SMENT WAS LIABLE TO BE ASSESSED ON BOOK PROFIT U/S. 115JB OF THE ACT, THAT ONE OF THE REASO NS FOR RE-OPENING THE ASSESSMENT WAS NON- CONSIDERATION OF THE MAT PROVISIONS.FINALLY, THE FA A HELD THAT THE ASSESSMENT WAS VALIDLY RE- OPENED.WITH REGARD TO REJECTING THE CLAIM U/S.80IB( 10) OF THE ACT,THE FAA HELD THAT THERE WAS NO REQUIREMENT OF OWNERSHIP OF LAND FOR CLAIMING DE DUCTION U/S.80IB(10),THAT THERE WAS ALSO NO REQUIREMENT THAT APPROVAL FROM THE MUNICIPALITY SHO ULD BE IN THE NAME OF THE ASSESSEE, IN THE CASE UNDER CONSIDERATION THE SIZE OF THE PLOT OF LA ND WAS MORE THAN ONE ACRE,THAT ON THAT PLOT TWO BUILDINGS WERE CONSTRUCTED IN EARLIER YEARS,THAT CO NSTRUCTION OF THIRD TOWER WAS UNDERTAKEN IN THE YEAR UNDER CONSIDERATION,THAT THE FOURTH BUILDING W AS TO BE STARTED IN THE SUBSEQUENT YEARS. FOLLOWING THE DECISION OF VANDANA PROPERTIES OF THE HON'BLE BOMBAY HIGH COURT,HE HELD THAT ASSESSEE HAD COMPLETED THE OTHER CONDITION ALSO WIT H REGARD TO DATE OF COMPLETION OF PROJECT. THE FAA OBSERVED THAT AS PER THE PROVISIONS OF SECTION 80IB(10) OF THE ACT PROJECTS APPROVED BEFORE 1.4.2004 HAD TO BE COMPLETED BY 31.3.2008,THAT PROJ ECTS APPROVED AFTER 1.2.2004 WERE TO BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FIN ANCIAL YEAR IN WHICH THE HOUSING PROJECT WAS APPROVED,THAT THE PROJECT UNDERTAKEN BY THE ASSESSE E WAS NOT COMPLETED DURING THE YEAR, THAT THE ASSESSEEHAD VIOLATED THE MANDATORY CONDITION THAT I T WAS NOT ENTITLED FOR DEDUCTION U/S. 80IB(10), ON THE PROFITS OF SUCH INCOMPLETE PROJECT.FINALLY,U PHOLDING THE ORDER OF THE AO,HE DISMISSED THE APPEAL, FILED BY THE ASSESSEE. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)REFERRED TO PAGE NO.1 &2 OF THE PAPER BOOK(PB) -SPECIALLY ITEM NO.8 AND 16 AND CONTENDED THAT THE SAME FAA HAD ALLOWED THE DEDUCTION WHILE DECIDING THE APPEAL FOR THE AY.2009-10 ON THE SAME SET OF FACTS,THAT THREE WINGS OF THE PROJECT NAMELY A,B AND C WERE COMPLETED IN THE YEAR UNDER A PPEAL,THAT D-WING WAS COMPLETED IN THE AY.09-10, THAT PERMISSION FOR DEVELOPMENT WAS GIVEN TO THE ORIGINAL OWNERS ON 28.1.2004 BY THE PANVEL MUNICIPAL CORPORATION,THAT THE BUILDING OCCU PANCY CERTIFICATE FOR A,B,C WING WAS ISSUED ON 25.5.2006 BY THE LOCAL AUTHORITES,THAT THE MUNIC IPAL CORPORATION HAD ISSUED OCCUPANCY CERTIFICATE OF THE BUILDING FOR PART-B(BLDG.-D)ON 1 6.5.2008,THAT THE PROJECT WAS COMPLETED ON DUE DATES,THAT THERE WAS NO TANGIBLE MATERIAL WITH THE AO TO RE-OPEN THE ASSESSMENT,THAT ALL THE MATERIAL WAS AVAILABLE ON RECORD AND THE AO HAD APP LIED HIS MIND WHILE PASSING THE ORIGINAL ASSESSMENT, THAT THERE WAS NO QUESTION OF NOT FILIN G OF THE FORM 10CCB REPORT, THAT THE AUDITED ACCOUNTS WERE AVAILABLE TO THE AO.DEPARTMENTAL REPR ESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD DISALLOWED THE CLAIM MADE BY THE ASSESSEE ON FO UR COUNTS,THAT THE ALLOWED PARTIAL RELIEF TO 2583&2545/M/13 SEAWARD DEVELOPERS-06-07 3 THE ASSESSEE,THAT HE HAD HELD THAT BUILDING WAS NOT COMPLETED IN THE YEAR UNDER APPEAL,THAT THE AO WAS NOT JUSTIFIED IN DENYING THE BENEFITS FOR OT HER REASONS,THAT ASSESSEE HAD CONSTRUCTED TWO PORTION I.E.A AND B,THAT A PORTION CONSISTED OF THR EE WINGS,THAT AS PER THE MUNICIPAL AUTHORITIES THREE WINGS OF PORTION A WERE CONSTRUCTED BY 25.05. 2006,THAT OCCUPANCY CERTIFICATE WAS ALSO ISSUED FOR THAT PORTION,THAT THE ASSESSEE HAD CLAIM ED DEDUCTION FOR THAT PORTION ONLY.WE HAVE GONE THROUGH THE CERTIFICATES ISSUED BY THE MUNICIP ALITY AND THE DR COULD NOT CONTROVERT THE FACTS MENTIONED IN THOSE DOCUMENTS.IN THESE CIRCUMS TANCES,WE ARE UNABLE TO ENDORSE THE STAND TAKEN BY THE FAA.SO,REVERSING HIS ORDER, WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. ITA 2445/MUM/13-AY.2009-10: 6. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE AD DITION MADE BY THE AO,U/S.80IB OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD MADE THE CLAIM OF RS.37.50 LACS U/S.80IB.HE HELD THAT THE ASSESSEE WA S NOT ENTITLED TO THE DEDUCTION CLAIMED BY IT AS IT DID NOT OWN THE PLOT OF LAND,THAT THE AREA OF PLOT OF LAND WAS LESS THAN ONE ACRE, THAT THE PROJECT WAS NOT COMPLETED IN THE PREVIOUS YEAR RELE VANT TO THE AY.UNDER CONSIDERATION,THAT THE PERMISSION FOR DEVELOPING THE PROJECT WAS NOT ISSUE D BY THE MUNICIPAL AUTHORITIES IN THE NAME OF THE ASSESSEE.HE HELD THAT ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION. 7. THE FAA REFERRING TO HIS ORDER FOR AY 2006-07,HELD THAT THERE WAS NO VIOLATION OF ELIGIBILITY CONDITIONS ON PART OF THE ASSESSEE AS FAR AS FIRST THREE CONDITIONS WERE CONCERNED.HE FURTHER HELD THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE VIDE LETTERS DT.20.9.11 AND 11.11.2011, HAD INFORMED THE AO THAT THE PROJECT WAS COMPLETED DURI NG THE YEAR,THAT THE NECESSARY EVIDENCE IN FORM OF COMMENCEMENT CERTIFICATE AND COMPLETION CE RTIFICATE WERE ALSO SUBMITTED,THAT THE PROJECT WAS COMPLETED WITHIN FOUR YEARS,THAT IT HA D FULFILLED THE CONDITIONS AS ENVISAGED BY THE SECTION 80IB OF THE ACT.HE DIRECTED THE AO TO ALLO W THE DEDUCTION AS CLAIMED BY THE ASSESSEE. 8. BEFORE US THE DEPARTMENTAL REPRESENTATIVE (DR)RELIE D UPON THE ORDER OF THE AO AND THE AR SUPPORTED THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.IN OUR OPINION,THE FAA HAD RIGHTLY HELD THAT THERE WAS NO REQUIREMENT OF O WNERSHIP OF LAND FOR CLAIMING DEDUCTION U/S.80IB(10),THAT HE WAS JUSTIFIED IN HOLDING THAT THERE WAS ALSO NO REQUIREMENT THAT APPROVAL FROM THE MUNICIPALITY SHOULD BE IN THE NAME OF THE ASSESSEE, IN THE CASE UNDER CONSIDERATION THE SIZE OF THE PLOT OF LAND WAS MORE THAN ONE ACRE.WE FIND THAT THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT THE ASSESSEE HAD COMPLETED THE PROJECT WITHIN THE STIPULATED TIME AND THAT THE FINDING IS BASED ON DOCUMENTARY EVIDENCES.THEREFORE ,IN OUR OPINION,HIS ORDER DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.CONFIRMING HIS ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED AND THE APPEAL OF THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2016. 01 , 2016 SD/- SD/- ( / SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER !# / ACCOUNTANT MEMBER /MUMBAI, /DATE: 01.01.2016 . . . . .. . JV.SR.PS. 2583&2545/M/13 SEAWARD DEVELOPERS-06-07 4 & ' / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ $ & , 4. THE CONCERNED CIT / $ & 5. DR E BENCH, ITAT, MUMBAI / ') , , . . . 6. GUARD FILE/ (, //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.