Satern Griha Nirman Pvt. Ltd., Kolkata V. I.T.O.,Ward-1(4), Kolkata

ITA 2616/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2070 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S JHAJHARIA
• Section: 43B; 80HHC

Judgement Text

ITA NO. 2616/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SATERN GRIHA NIRMAN PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 2616/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SATERN GRIHA NIRMAN PVT. LIMITED,............. ..................APPELLANT C/O. M/S. SALARPURIA JAJODIA & CO., 7, C.R. AVENUE, 3 RD FLOOR, KOLKATA-700072 [PAN: AAICS0875L] -VS.- INCOME TAX OFFICER,................................ ................................RESPONDENT WARD-1(4), KOLKATA, AAYAKAR BHAWAN, 7 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI S. JHAJHARIA, C.A., FOR THE APPELLANT SHRI SANDEEP LAKRA, JCIT, SR. D.R., FOR THE RESPOND EN T DATE OF CONCLUDING THE HEARING : FEBRUARY 17, 2020 DATE OF PRONOUNCING THE ORDER : MAY 04, 2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATA DAT ED 25.10.2019. 2. THE ISSUE INVOLVED IN GROUND NO. 1 OF THIS APPEA L RELATES TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF ASSESSEES CLAIM FOR DED UCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 IN RESPECT OF INTEREST RECEIVED AMOUNTING TO RS.11,10,810/- AND OTHER INCOME AMOUNT ING TO RS.6,36,746/-. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF BUILDERS AND PROPERTY DEVELOPERS. T HE RETURN OF INCOME ITA NO. 2616/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SATERN GRIHA NIRMAN PVT. LIMITED 2 FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 17.09.2011 DECLARING TOTAL INCOME AT NIL. DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE- COMPANY HAD DEVELOPED A HOUSING PROJECT NAMELY SAL ARPURIA SYMPHONY IN BANGALORE, KARNATAKA AND THE ENTIRE PROFIT OF TH E SAID PROJECT WAS CLAIMED TO BE EXEMPT UNDER SECTION 80IB(10) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT INTEREST INCOME OF RS.11,10,810/- RECEIVED ON BANK DEPOSITS, ETC. AS WELL AS OTHER INCOME OF RS.6,36,476/- EARNED DURING THE YEAR UNDER CONSIDERATION WAS ALSO INCLUDED BY THE ASSESSEE IN THE PROFIT EARNED FROM DEVELOPING OF A HOUSING PROJECT, WHICH WAS CLAIMED TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). ACCORDING TO THE ASSESSING OFFICER, THE SAID INCOME WAS NOT DERIVED BY THE ASSESSEE FROM TH E BUSINESS OF DEVELOPMENT OF HOUSING PROJECT AND THE SAME, THEREF ORE, WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). HE ACCORDINGL Y DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 8 0IB(10) IN RESPECT OF INTEREST INCOME OF RS.11,10,810 AND OTHER INCOME AM OUNTING TO RS.6,86,476/-. ON APPEAL, THE LD. CIT(APPEALS) CONF IRMED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS PER THE PROVISIONS OF SECTION 80IB(10), THE INCOME DERIVED FROM THE BU SINESS OF DEVELOPING HOUSING PROJECT IS ELIGIBLE FOR DEDUCTION AND AS HE LD IN THE VARIOUS JUDICIAL PRONOUNCEMENTS, THE EXPRESSION DERIVED FR OM IN SECTION 80IB(10) ENVISAGES A DIRECT OR FIRST DEGREE CONNECT ION OF THE INCOME ELIGIBLE FOR DEDUCTION WITH THE CORRESPONDING BUSIN ESS OF THE ASSESSEE OF DEVELOPING A HOUSING PROJECT. IT MEANS THE IMMEDIAT E SOURCE OF THE INCOME SHOULD BE THE BUSINESS OF THE ASSESSEE OF DE VELOPING A HOUSING PROJECT IN ORDER TO MAKE IT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). IF THIS WELL SETTLED TEST IS APPLIED IN THE PRESENT CASE, I FIND THAT THE INTEREST OF RS.11,10,810/- EARNED BY THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION ON BANK DEPOSITS ETC. CANNOT BE HELD TO BE ELIGIBLE FOR ITA NO. 2616/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SATERN GRIHA NIRMAN PVT. LIMITED 3 DEDUCTION UNDER SECTION 80IB(10) AS THE IMMEDIATE S OURCE OF THE SAID INTEREST INCOME WAS NOT THE BUSINESS OF THE ASSESSE E OF DEVELOPING HOUSING PROJECT AND IT WAS THE INVESTMENT MADE BY T HE ASSESSEE IN BANK DEPOSITS, ETC. AS REGARDS THE OTHER INCOME AMOUNTIN G TO RS.6,36,476/-, THE DETAILS OF WHICH ARE PLACED AT PAGE NO. 7 OF TH E ASSESSEES PAPER BOOK, I FIND THAT THE INCOME BY WAY OF TRANSFER FEES RECE IVED BY THE ASSESSEE FOR APARTMENT BOOKING AMOUNTING TO RS.4,10,892/- AND IN TEREST RECEIVED FOR DELAY IN PAYMENT AGAINST FLAT AMOUNTING TO RS.1,61, 674/- HAD A DIRECT OR FIRST DEGREE CONNECTION WITH THE BUSINESS OF THE AS SESSEE OF DEVELOPING A HOUSING PROJECT AND THE SAME, THEREFORE, WAS ELIGIB LE FOR DEDUCTION UNDER SECTION 80IB(10). THE IMMEDIATE SOURCE OF THE SAID INCOME, IN MY OPINION, WAS THE BUSINESS OF THE ASSESSEE OF DEVELO PING A HOUSING PROJECT AND THEREFORE, THE SAID INCOME WAS ELIGIBLE FOR DED UCTION UNDER SECTION 80IB(10). REGARDING THE BALANCE AMOUNT OF OTHER INC OME TO THE EXTENT OF RS.63,910/-, THE ASSESSEE HAS NOT BEEN ABLE TO FURN ISH ANY DETAILS OF THE SAME TO SHOW THAT THE SAID AMOUNT WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). I ACCORDINGLY ALLOW PARTLY GROUND NO. 1 OF THE ASSESSEES APPEAL. 5. AS REGARDS THE GROUND NO. 2 RAISED BY THE ASSES SEE IN THIS APPEAL RELATING TO ITS ALTERNATIVE CLAIM THAT THE DISALLOW ANCE OF DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF INTEREST INCOME SHOU LD BE RESTRICTED TO NET INTEREST AND NOT GROSS INTEREST AS DONE BY THE AUTH ORITIES BELOW, I FIND THAT THIS ALTERNATIVE CLAIM OF THE ASSESSEE IS DULY SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ACG ASSOCIATED CAPSULES PVT. LIMTED VS.- CIT (343 ITR 89), WHEREI N IT WAS HELD IN THE CONTEXT OF ASSESEES CLAIM FOR DEDUCTION UNDER SECT ION 80HHC THAT 90% OF NOT THE GROSS INTEREST BUT ONLY THE NET INTEREST WH ICH HAD BEEN INCLUDED IN THE PROFITS OF BUSINESS OF THE ASSESSEE, AS COMP UTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHOUL D BE DEDUCTED FOR DETERMINING THE PROFITS OF THE BUSINESS ELIGIBLE FO R DEDUCTION. KEEPING IN VIEW THE SAID DECISION OF THE HONBLE SUPREME COURT , I DIRECT THE ITA NO. 2616/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SATERN GRIHA NIRMAN PVT. LIMITED 4 ASSESSING OFFICER TO VERIFY THE AMOUNT OF NET INTER EST KEEPING IN VIEW THE DIRECT NEXUS THEORY AND ALLOW APPROPRIATE RELIEF TO THE ASSESSEE ON THIS ISSUE. GROUND NO. 2 OF THE ASSESSEES APPEAL IS ACC ORDINGLY TREATED AS ALLOWED. 6. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 RE LATING TO THE DISALLOWANCE OF RS.17,765/- MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 43B ON ACCOUN T OF ESI PAYABLE, IT IS OBSERVED THAT THE ESI SHOWN AS PAYABLE AMOUNTING TO RS.17,765/- WAS DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 4 3B OF THE ACT AS THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO SHOW THA T THE SAME WAS DEPOSITED BEFORE FURNISHING ITS RETURN OF INCOME FO R THE YEAR UNDER CONSIDERATION. EVEN AT THE TIME OF HEARING BEFORE T HE TRIBUNAL, NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD ON BEHALF OF TH E ASSESEE TO SHOW THAT THE ESI PAYABLE AMOUNTING TO RS.17,765/- WAS P AID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. I, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE AND UPHOLDING THE S AME, I DISMISS GROUND NO. 3 OF THE ASSESSEES APPEAL. 7. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED GROUND NO. 4 INVOLVING THE ISSUE RELATING TO THE DISALLOWANCE OF RS.13,811/- MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF INTEREST ON T DS AND PENALTY ON PROFESSIONAL TAX. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 04, 2020. SD/- (P.M. JAGTAP) VICE- PRESIDENT) KOLKATA, THE 4 TH DAY OF MAY, 2020 ITA NO. 2616/KOL/2019 ASSESSMENT YEAR: 2011-2012 M/S. SATERN GRIHA NIRMAN PVT. LIMITED 5 COPIES TO : (1) M/S. SATERN GRIHA NIRMAN PVT. LIMITED, C/O. M/S. SALARPURIA JAJODIA & CO., 7, C.R. AVENUE, 3 RD FLOOR, KOLKATA-700072 (2) INCOME TAX OFFICER, WARD-1(4), KOLKATA, AAYAKAR BHAWAN, 7 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-1, KO LKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.