The ACIT, Circle-3, Surat V. M/s. Blessing Construction, Surat

ITA 2722/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60366 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL K SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.2722/AHD/2009 A. Y. 2006-07 ACIT, CIRCLE-3 SURAT APPELLANT VS. M/S BLESSING CONSTRUCTION OFF. ISHITA ROW HOUSE, BEHIND SANGHAVI TOWER, ADAJAN ROAD, SURAT PAN-AAGFB1228B RESPONDENT DEPARTMENT BY : SHRI VINOD TANWANI, SR. D.R. ASSESSEE BY : SHRI ANIL K. SHAH, A.R. DATE OF HEARING : 28.05.2012 DATE OF PRONOUNCEMENT : 28.05.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A) DATED 29.06.2009 PASSED IN APPEAL NO.CAS/II/345/2008-09. 2. REVENUE HAS TAKEN FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), SURAT HAS ERRED IN DELETING THE DISALLOWANCE OF IMPACT FEES OF RS.13,95,672/- HOL DING THAT I.T.A. NO.2722/AHD/2009 A. Y. 2006-07 2 THE ASSESSEE HAD CARRIED OUT THE CONSTRUCTION OF BA LCONY AS PER SANCTIONED PLAN INCLUDING BALCONY COVER AND NO UNAUTHORIZED OR ILLEGAL CONSTRUCTION IS CARRIED OUT BY THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASS ESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.13,95,672/- UNDER THE HEAD AS SMC FEES. WHEN ASSESSEE WAS ASKED TO FURNISH DETAILS IN RESPECT OF THIS ENTRY, THE ASSESSEE SUBMITTED THAT THIS SUM REPRESENTS THE FEES PAID FOR COVERING BALCONIES IN THE BUILDING CONSTRUCTED BY THE ASSESSEE, THE ASSESSEE BEING ENGAGED IN THE BUSINESS OF CONSTRUCTION. THE ASSESSEE FURTHER CON TENDED THAT SUCH PAYMENT DID NOT REPRESENT ANY PENALTY AS HE WAS NOT CHARGED FOR THE CONTRAVENTION OF ANY LAW. IT WAS ESSENTIALLY IN TH E NATURE OF FEES WHICH WAS PAID FOR GETTING THE APPROVAL OF THE SMC TO COV ER THE BALCONIES SINCE IT WAS NOT INCLUDED IN THE ORIGINAL PLAN WHICH WAS EARLIER APPROVED. IN RESPONSE TO SHOW CAUSE NOTICE ISSUED BY THE A.O. TH E ASSESSEE FURNISHED THE DETAILS OF THE PAYMENT MADE FOR THE PERIOD OF T IME WITHIN THE RELEVANT FINANCIAL YEAR AND CONTENDED THAT THE FEES WERE PAI D IN ACCORDANCE WITH THE CIRCULAR ISSUED BY THE CITY DEVELOPMENT OFFICER A COPY OF WHICH WAS ALSO FURNISHED BEFORE THE A.O. IT WAS, THUS, THE C ONTENTION OF THE ASSESSEE THAT IT WAS A COMMERCIAL EXPENDITURE AND W AS INCURRED AS ON ESSENTIAL PART OF THE ASSESSEES BUSINESS. THE A.O ., HOWEVER, REJECTED THESE SUBMISSIONS OF THE ASSESSEE AND OBSERVED THAT THE FEES WAS CHARGED FOR THE VIOLATION OF THE BUILDING PLAN AND THIS REPRESENT A CONTRAVENTION OF THE RELEVANT LAW, CONSEQUENTLY, IT WAS IN THE NATURE OF I.T.A. NO.2722/AHD/2009 A. Y. 2006-07 3 PENALTY WHICH WAS NOT ALLOWABLE AS A DEDUCTION UNDE R THE ACT. THE A.O., THEREFORE, DISALLOWED AND ADDED A SUM OF RS.13,95,6 72/- TO THE ASSESSEES TOTAL INCOME. 4. BEFORE LD. CIT(A) THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE A.O. RELIANCE WAS ALSO PLACED IN T HE CASE OF VASTUSHILP CORPORATION DECIDED BY LD. CIT(A) WHOSE FACTS WERE IDENTICAL WITH THAT OF THE ASSESSEE. LD. CIT(A), PLACING RELIANCE ON HIS DECISION IN THE CASE OF VASTUSHILP CORPORATION HELD THAT IMPACT FEE FOR BAL CONY COVER CHARGES PAID BY THE ASSESSEE WERE NOT IN THE NATURE OF PENA LTY AND THEREFORE THERE WAS NO REASON FOR THE A.O. TO DISALLOW THIS S UM OF RS.13,95,672/- AND THE SAME WAS DELETED BY HIM. AGGRIEVED BY THIS ORDER OF LD. CIT(A) NOW THE REVENUE IS BEFORE US. 5. AT THE TIME OF HEARING BOTH PARTIES AGREED THAT THE ISSUE NOW IS COVERED BY HONBLE ITAT DECISION IN THE CASE OF VASTUSHILP CORPORATION, ITA NO.96/AHD/2009 DATED 30.11.2011 WHEREIN FOLLOWI NG WAS HELD:- AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSI NG THE RECORD, WE FIND THAT THE ADDITION OF RS.6 LACS HAS BEEN MADE BY THE AO BY TREATING THE PAYMENT OF RS.6 LACS MADE BY THE ASSESSEE TO SURAT MUNICIPAL CORPORATION FOR COVERING BALCONIES AS PENAL IN NATURE. THE LD. CIT(A) AFTER ANALYZING THE FACTS IN DETAIL AND FOLLOWING THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF LOKNATH & CO. (SUPRA) AND HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SYNDICA TE BANK (SUPRA) ON SIMILAR FACTS HAS GIVEN RELIEF TO THE AS SESSEE BY HOLDING THAT THE PAYMENT OF RS.6 LACS MADE BY THE A SSESSEE TO SURAT MUNICIPAL CORPORATION WAS IN FACT COMPENSA TORY IN NATURE AND, THEREFORE, NO DISALLOWANCE WAS CALLED F OR IN THIS CASE. SINCE THE REVENUE HAS NEITHER DISTINGUISHED FACTS OF THIS CASE FROM THE FACTS OF THE CASES RELIED ON BY THE LD. CIT(A) NOR ANY CONTRARY DECISION WAS RELIED UPON AT THE TIME OF HEARING BEFORE US, WE ARE LEFT WITH NO OPTION BU T TO CONFIRM I.T.A. NO.2722/AHD/2009 A. Y. 2006-07 4 THE ORDER PASSED BY THE LD. CIT(A). THE GROUND RAI SED BY THE REVENUE IS DISMISSED. RESPECTFULLY FOLLOWING THE SAME, THE ORDER PASSED BY LD. CIT(A) IS HEREBY UPHELD. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28.05.201 2 SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER JU DICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. - 28 /05/2012 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. !' / CONCERNED CIT 4. !' - / CIT (A) 5. #$% , & , / DR, ITAT, AHMEDABAD 6. %'( )* / GUARD FILE. BY ORDER/ , + / , & ,