D.C.I.T.CC.10, MUMBAI V. AJMERA HOUSING CORPORATION, MUMBAI

ITA 2784/MUM/2011

• Counselvise Citation: 278419914 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS S PADMAJA
• Keywords: Additional evidence
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM) .. , , ./I.T.A. NO.2784/MUM/2011 ( / ASSESSMENT YEAR : 2007-08) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -10, 8 TH FLOOR, ROOM NO.802, OLD. CGO BLDG, ANNEX, M K ROAD, MUMBAI-400020 / VS. M/S AJMERA HOUSING CORPORATION, REHMAN BUILDING, 2 ND FLOOR, 24, VEER NARIMAN ROAD, FORT, MUMBAI-400001 ( ! / APPELLANT) .. ( '# ! / RESPONDENT) ./ $% ./PAN/GIR NO. :AAAFA3654J ! & / APPELLANT BY : M RS.S PADMAJA '# ! ' & /RESPONDENT BY : MR. PRAKASH JOTWANI ( ) ' *+ / DATE OF HEARING : 12.8.2014 ,- ' *+ /DATE OF PRONOUNCEMENT : 27.8.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 28- 01-2011 PASSED BY LD CIT(A)-37, MUMBAI AND IT RELAT ES TO THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB(10) OF T HE ACT TO THE EXTENT OF I.T.A. NO.2784/MUM/2011 2 RS.16.01 CRORES. ACCORDING TO THE REVENUE, THE FIR ST OCCASION OF APPROVAL OF THE PROJECT WAS ON 10.07.1997 AND HENCE THE CONSTRUCTIO N OF THE PROJECT SHOULD BE CONSIDERED AS COMMENCED BY THAT DATE, I.E., BEFORE THE PRESCRIBED DATE OF 01.10.1998 AND THE SAME HAS RESULTED IN VIOLATION O F CLAUSE (A) OF 80IB(10) WHICH PROVIDES THAT THE COMMENCEMENT OF HOUSING PRO JECT SHOULD BE ON OR AFTER 1 ST OCTOBER, 1998. 3. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE S TATED IN BRIEF. THE ASSESSEE IS ENGAGED IN REAL ESTATE DEVELOPMENT AND DURING THE YEAR UNDER CONSIDERATION, IT CLAIMED DEDUCTION U/S 80IB OF THE ACT FOR A SUM OF RS.16,17,43,281/- IN RESPECT OF SALE OF FLATS OF BU ILDINGS NUMBERED AS T-34, T-35, T-36 & T-37. THE AO NOTICED THAT THE DEDUCTION CLA IMED U/S 80IB(10) IN THE EARLIER YEARS IN RESPECT OF BUILDINGS NUMBERED AS T -34 & T-35 WAS NOT CONSIDERED. THE ASSESSEE ALSO COULD NOT GIVE SATIS FACTORY EXPLANATION IN THAT REGARD. ACCORDINGLY, THE AO REJECTED THE CLAIM OF DEDUCTION TO THE EXTENT OF RS.16,08,530/- RELATING TO T-34 & T-35 AND THE SAME WAS ALSO UPHELD BY THE LD CIT(A). THE ASSESSEE SEEMS TO HAVE ACCEPTED THIS D ISALLOWANCE. 4. IN RESPECT OF BUILDINGS NUMBERED AS T-36 & T-3 7, THE AO NOTICED THAT THE IOD FOR THE BUILDING WAS ISSUED FOR THE FIRST TIME ON 10-07-1997. THE ASSESSEE OBTAINED THE IOD SECOND TIME ON 21.04.2003. SINCE T HE FIRST IOD WAS OBTAINED ON 10-07-1997, THE AO TOOK THE VIEW THAT THE ASSESS EE HAS COMMENCED THE PROJECT PRIOR TO 01-10-1998, THUS VIOLATING THE CON DITION PRESCRIBED IN CLAUSE (A) OF SEC. 80IB(10) OF THE ACT. IN THIS REGARD, THE AO TOOK SUPPORT FROM THE EXPLANATION GIVEN UNDER SEC. 80IB(10), WHICH READS AS UNDER:- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE I.T.A. NO.2784/MUM/2011 3 BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. ACCORDINGLY, HE REJECTED THE CLAIM MADE BY THE ASSE SSEE FOR DEDUCTION U/S 80IB(10) OF THE ACT. 5. IN THE APPEAL FILED BEFORE LD CIT(A), THE ASSESS EE FILED FOLLOWING ADDITIONAL EVIDENCES BEFORE HIM:- (A) NO OBJECTION CERTIFICATE (NOC) OBTAINED FROM CHIEF FIRE OFFICER, MUMBAI, FIRE BRIGADE, MUMBAI; AND (B) CERTIFICATE OBTAINED FROM AN ARCHITECT CERTIF YING THAT THE RELEVANT PROJECT STARTED AFTER 30-04-1999. THE ASSESSEE SUBMITTED THAT THE NOCS WERE OBTAINED FROM CHIEF FIRE OFFICER ON 27-06-2001 AND 13.3.2003. IT WAS FURTHER SUBMITTED THAT THE CONSTRUCTION CANNOT BE COMMENCED PRIOR TO OBTAINING THE ABOVE SA ID NOC. SINCE ADDITIONAL EVIDENCES WERE FILED BEFORE HIM FOR THE FIRST TIME, THE LD CIT(A) CALLED FOR A REMAND REPORT FROM THE AO IN RESPECT OF THE ADDITIO NAL EVIDENCES. THE ASSESSING OFFICER MADE NECESSARY ENQUIRIES WITH THE CHIEF FIR E OFFICER TO CLARIFY HIS DOUBTS AND LATER FURNISHED HIS REMAND REPORT DATED 15.12.2 010, WHEREIN THE AO ADMITTED THAT THE NOCS WERE OBTAINED WELL AFTER THE CUT OFF DATE OF 1.10.1998 AND ACCORDINGLY OPINED THAT THE CONSTRUCTION APPEAR S TO HAVE STARTED AROUND THE PERIOD OF THE DATE OF NOC. ACCORDINGLY, THE LD CIT (A) HELD THAT THE ASSESSEE HAS COMMENCED THE DEVELOPMENT AND CONSTRUCTION OF T -36 & T-37 PROJECT AFTER THE FIRST DAY OF OCTOBER, 1998 AS EVIDENCED BY THE NOC GIVEN BY THE FIRE AUTHORITY AND ALSO THE REMAND REPORT FURNISHED BY T HE AO. THE LD CIT(A), AFTER EXAMINING THE FACTS AVAILABLE IN THE CASE WITH REGA RD TO THE COMPLIANCE OF OTHER CONDITIONS PRESCRIBED, HELD THAT THE ASSESSEE HAS S ATISFIED ALL OTHER CONDITIONS PRESCRIBED IN SEC. 80IB(10). ACCORDINGLY, HE DIREC TED THE AO TO ALLOW DEDUCTION I.T.A. NO.2784/MUM/2011 4 CLAIMED U/S IN RESPECT OF BLOCK NUMBERED AS T-36 & T-37. AGGRIEVED BY THE ORDER OF LD CIT(A), THE REVENUE HAS FILED THIS APPE AL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE PRESENT DISPUTE REVOLVES AROUND THE PROVISIONS OF SEC. 80IB (10) OF THE ACT. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT PROVI SIONS AS IT STOOD AT RELEVANT POINT OF TIME:- 80IB(10) THE AMOUNT OF DEDUCTION IN THE CASE OF A N UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE 31 ST DAY OF MARCH, 2005 BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF T HE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESS MENT YEAR FROM SUCH HOUSING PROJECT IF,-- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECTG ON OR AFTE R 1 ST DAY OF OCTOBER, 1998 A READING OF THE ABOVE SAID PROVISIONS WOULD SHOW T HAT THE HOUSING PROJECT SHOULD HAVE BEEN APPROVED BEFORE 31 ST DAY OF MARCH, 2005 AND THE DEVELOPMENT AND CONSTRUCTION SHOULD COMMENCE ON OR AFTER 1 ST DAY OF OCTOBER, 1998. THUS, THE STATUTE PRESCRIBES TWO DIFFERENT TIME LIMITS, V IZ.., ONE FOR APPROVAL AND ANOTHER ONE FOR COMMENCEMENT OF PROJECT. WE HAVE EARLIER NOTICED THAT THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE FOLLOW ING EXPLANATION GIVEN IN SEC. 80IB(10) OF THE ACT:- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLA N OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. THE ASSESSING OFFICER HAS INTERPRETED THE PURPOSE OF THE ABOVE SAID EXPLANATION AS UNDER:- I.T.A. NO.2784/MUM/2011 5 BY THE HELP OF THIS EXPLANATION, THE LEGISLATURE HAS DEFINED THE DATE OF COMMENCEMENT OF THE HOUSING PROJECT AS THE DATE ON WHICH THE HOUSING PROJECT WAS FIRST APPROVED BY THE LOCAL AUTHORITY. THIS IS THE REASON WHY THIS EXPLANATION FORMS PART OF THE SAME THUS, IT APPEARS THAT THE ASSESSING OFFICER HAS TAK EN THE VIEW THAT THE DATE OF APPROVAL SHOULD BE CONSIDERED AS THE DATE OF COMMEN CEMENT OF THE PROJECT ALSO. THE SAID VIEW ENTERTAINED BY THE AO IS APPARENT FR OM THE FOLLOWING OBSERVATIONS MADE BY HIM IN THE ASSESSMENT ORDER:- IN THE ABOVE CIRCUMSTANCES, THE SUBMISSION OF THE ASSESSEE THAT IT COMMENCED CONSTRUCTION ACTIVITY AFTER 1/10/1998 WIL L NOT CHANGE THE DATE OF COMMENCEMENT OF THE PROJECT AS ENVISAGED IN THIS SECTION TO A DATE LATER THAN 1/10/1998 BECAUSE THE DATE OF COMMENCEME NT HAS BEEN EXPLAINED BY THE LEGISLATURE AS THE DATE ON WHICH T HE HOUSING PROJECT WAS FIRST APPROVED BY THE LOCAL AUTHORITY AND THE COMME NCEMENT CERTIFICATE WAS FIRST ISSUED. IN THE CASE OF THE ASSESSEE THIS HAS BEEN ISSUED ON 10.7.1997 WHICH HAS NOT BEEN DENIED BY THE ASSESSEE . THEREFORE THE DATE OF COMMENCEMENT OF THE PROJECT IN THIS CASE IS 10.7.1997 WHICH IS PRIOR TO THE DATE 1.10.1998. THIS HOUSING PROJECT OF THE ASSESSEE IS THEREFORE NOT IN CONFORMITY WITH THE PROVISIONS OF SECTION 80IB(10) IN SO FAR AS IT HAS COMMENCED PRIOR TO 1.10.1998. 7. THERE SHOULD NOT BE ANY DISPUTE THAT THE DATE OF COMMENCEMENT CONTEMPLATED IN SECTION 80IB(10) IS THE PHYSICAL DA TE OF COMMENCEMENT OF THE PROJECT. HENCE, IN OUR VIEW, THE ASSESSING OFFICER WAS NOT CORRECT IN OBSERVING THAT THE DATE OF COMMENCEMENT IS TO BE TAKEN AS THE DATE OF APPROVAL. WE HAVE ALREADY NOTICED THAT THE ASSESSEE HAD FILED COPIES OF NOC OBTAINED FROM THE CHIEF FIRE OFFICER BEFORE THE LD CIT(A) AND THE SAM E WERE CONFRONTED WITH THE ASSESSING OFFICER. DURING THE COURSE OF REMAND PRO CEEDINGS, THE ASSESSING OFFICER HAS MADE NECESSARY ENQUIRIES WITH THE FIRE DEPARTMENT AND HAS COME TO KNOW OF THE FACT THAT THE CONSTRUCTION COULD NOT BE COMMENCED WITHOUT OBTAINING THE NOC FROM THE CHIEF FIRE OFFICER. ACC ORDINGLY, THE ASSESSING OFFICER HAS EXPRESSED THE FOLLOWING VIEW IN THE REMAND REPO RT:- I.T.A. NO.2784/MUM/2011 6 .FROM THE PERUSAL OF THE CONTENTS OF THE LETTER O F CFO, IT APPEARS THAT THE NOCS ARE ISSUED BY THE FIRE DEPARTMENT FOR CONS TRUCTION OF BUILDING BEFORE THE ACTUAL CONSTRUCTION COMMENCES. IN THIS CASE BOTH THE NOCS ARE DATED 13.3.2003 AND 27.6.2001, I.E., WELL AFTER THE CUT OF DATE OF 1.10.1998. THEREFORE THE CONSTRUCTION APPEARS TO H AVE STARTED AROUND THE PERIOD OF THE DATE OF NOC. THEREFORE THE REVEN UE HAS NO OBJECTION IN ADMITTING THE ADDITIONAL EVIDENCE AND CONSIDERING T HE SAME ON MERITS AS THE LD CIT(A) MAY DEEM FIT. 8. WE NOTICE THAT THE LD CIT(A) HAS DULY CONSIDE RED THE NOCS ISSUED BY THE CHIEF FIRE OFFICER AND ALSO THE REMAND REPORT AND A CCORDINGLY HELD THAT THE CONSTRUCTION HAS COMMENCED AFTER THE FIRST DAY OF O CTOBER, 1998. SINCE THE FIRST APPELLATE AUTHORITY HAS ENDORSED THE VIEW EXPRESSED BY THE ASSESSING OFFICER IN THE REMAND REPORT, NORMALLY THE REVENUE SHOULD NOT GET AGGRIEVED BY THE ORDER PASSED BY LD CIT(A). STILL, THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE FINDING GIVEN BY THE FIRST APPELLATE AUTHORITY ON T HE BASIS OF THE VIEW EXPRESSED BY THE AO. HENCE, WE DO NOT FIND ANY MERIT IN THE GROUND URGED BEFORE US IN THE PRESENT APPEAL. ACCORDINGLY, WE UPHOLD THE ORDER O F LD CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27TH AUG , 2014. ,- ( . / 0 27TH AUG, 2014 - ' 1) 2 SD SD ( / VIVEK VARMA) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( ) MUMBAI: 27TH AUG,2014. . . ./ SRL , SR. PS I.T.A. NO.2784/MUM/2011 7 !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' # ! / THE RESPONDENT. 3. ( 4* ( ) / THE CIT(A)- CONCERNED 4. ( 4* / CIT CONCERNED 5. 51 '* 6 , + 6 , ( ) / DR, ITAT, MUMBAI CONCERNED 6. 17 8) / GUARD FILE. 9 ( / BY ORDER, TRUE COPY : $ (ASSTT. REGISTRAR) + 6 , ( ) /ITAT, MUMBAI