DREAM HOUSE REALTORS, MUMBAI V. ITO WD 2(1), MUMBAI

ITA 2877/MUM/2010

• Counselvise Citation: 287719914 RSA 2010
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 12-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: KISHOR PODDAR
• Keywords: Competent authority
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI B.R. MITTAL, J.M. AND SHRI RAJENDRA SI NGH, A.M. ITA NO. : 2877/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. DREAM HOUSE REALTORS NEEL AKASH GANGA, GR. FLOOR SHOP NO.7, LAXMI PARK NAYA NAGAR, MIRA ROAD (E) THANE-401 107. PAN NO: AADFD 9736 B INCOME TAX OFFICER WARD-2 (1) QUERESHI MANSION BUILDING GOKHALE ROAD, NEAR TEEN HATH NAKA, THANE (W) THANE-400 602. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI KISHOR PODDAR RESPONDENT BY : SHRI C.G.K. NAIR DATE OF HEARING : 4.4.2012 DATE OF PRONOUNCEMENT : 20.4.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 26.11.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2004-05. THE MAIN DISPUTE RAISED IN THIS APPEAL IS REGARDING THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961(THE ACT). 2. THE ASSESSEE HAS ALSO RAISED A GROUND REGARDING DATE OF SERVICE OF THE ORDER OF CIT(A). THE ASSESSEE HAS SUBMITTED THAT THE ORDER DATED 26.11.2008 PASSED BY CIT(A) HAD NOT BEEN RECEIVE D IN THE NORMAL COURSE. THE ASSESSEE HAD OBTAINED A CERTIFIED COPY OF THE ORDER ONLY ON 31.3.2010. IN THE ACKNOWLEDGEMENT RECEI PT, THE OFFICE OF CIT(A) HAD MENTIONED THAT THE ORDER HAD BEEN SERVED ON 20.2.2009 ITA NO. 2877/M/10 A.Y.04-05 2 WHICH WAS NOT CORRECT. THE ASSESSEE DENIED ITS SIGNATURE ON T HE ACKNOWLEDGEMENT SLIP WHICH IT HAS CLAIMED WAS A FORGED O NE WHICH HAS ALSO BEEN CONFIRMED BY THE FORENSIC EXPERT MS. HIRAL A . MEHTA. THE ASSESSEE FILED AN AFFIDAVIT DATED 31.5.2011 TO THE ABOV E EFFECT. THE CASE OF THE ASSESSEE IS THAT SINCE THE ORDER WAS RECEIVED ON 3 1.3.2010 THE APPEAL FILED BY THE ASSESSEE WAS IN TIME. THE LD. DR WAS NOT IN A POSITION TO CONTROVERT THE CLAIM MADE IN THE AFFIDAVIT . IN FACT EVEN THE REGISTRY HAS NOT RAISED ANY OBJECTION OR ANY DEFECT MEMO POINTING OUT DELAY IN FILING THE APPEAL BY THE ASSESSEE AND APPEAL HAS BEEN TREATED AS FILED IN TIME. THE GROUND RAISED BY THE ASSESSEE IS DI SMISSED AS INFRUCTUOUS AND APPEAL IS ADMITTED FOR HEARING BEING F ILED IN TIME. 2.1 THE ONLY DISPUTE RAISED ON MERIT IS REGARDING DENI AL OF DEDUCTION UNDER SECTION 80IB(10). THE AO DURING THE ASSESSMENT PROCE EDINGS NOTED THAT SURVEY UNDER SECTION 133A CONDUCTED IN CASE O F THE ASSESSEE HAD SHOWN THAT THE ASSESSEE HAD MADE ALTERATION IN THE APPROVED PLAN AND CONVERTED SOME ADJOINING FLATS INT O SINGLE DWELLING UNITS DETAILS OF WHICH WERE AS UND ER:- SR. NO. BLDG. NO. FLAT NO. TOTAL AREA NAME OF PURCHASERS 1. A-3 002 & 003 1580 SQ. FT. + 200 TERRACE MRS. MEHEYABI SHABBIR SHAIKH MR. SHABBIR IBRAHIM SHAIKH 2. B-3 202 & 203 1020 SQ.F.T MRS. & MR.SURYAMANI MI SHRA 3. B-4 002 & 003 1020 SQ.FT. YASHAPPA JOMU DSOUZA KUMAR YASHAPPA DSOUZA 2.3 THE AO NOTED THAT IN THE FIRST TWO CASES, BUYERS W ERE HUSBAND AND WIFE AND IN THE 3 RD CASE THE FLAT HAD BEEN PURCHASED BY FATHER AND SON WHICH HAD BEEN JOINED TOGETHER. THEY HAD STATED TH AT ALTERATION IN MAKING THE TWO FLATS INTO A SINGLE DWELLING HAD BEEN MADE BY THE BUILDER BEFORE THE FLATS WERE SOLD. ALL THREE FLATS HA D SINGLE FRONT DOOR. ITA NO. 2877/M/10 A.Y.04-05 3 THUS, THESE FLATS WERE HAVING BUILT UP AREA OF MORE TH AN 1000 SQ.FT. WHICH WAS IN VIOLATION OF PROVISIONS OF SECTION 80IB(10). THE AO ALSO NOTED THAT IN TWO BUILDINGS I.E. B-2 AND B-1, THE AS SESSEE HAD CONSTRUCTED COMMERCIAL AREA HAVING 10 SHOPS WITH BUILT-UP AREA OF ABOUT 1800 SQ.FT. WHICH WAS ALSO IN VIOLATION OF PROVISI ONS AS DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS AVAILABLE FOR RESI DENTIAL PROJECTS. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAI N AS TO WHY THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) SHOULD NOT BE DISALLOWED. 2.4 THE ASSESSEE SUBMITTED THAT IT HAD SOLD THE SIX FLATS UNDER REFERENCE SEPARATELY AS PER SIX SEPARATE AGREEMENTS AND F LATS WERE ALSO REGISTERED SEPARATELY. THE ASSESSEE HAD ALSO OBTAINED NOC FOR THE SIX FLATS. IT WAS ALSO POINTED OUT THAT EACH FLAT HAD SU PER BUILT UP AREA ADMEASURING 790 SQ.FT. IN BUILDING A-3 AND 510 SQ.FT. IN BUILDING B-3 AND B-4. THEREFORE, BUILT UP AREA OF EACH FLAT WAS LE SS THAN 1000 SQ.FT. IT WAS ALSO SUBMITTED THAT BUILT UP COMMERCIAL AREA WAS ONLY 1800 SQ.FT. WHICH WAS LESS THAN 5% OF BUILT UP AREA AS WELL AS LESS THAN 2000 SQ.FT. AS REQUIRED UNDER THE PROVISIONS OF SECTION 8 0IB(10). THE ASSESSEE ALSO POINTED OUT THAT ALL OTHER CONDITIONS WERE ALSO FULFILLED AND THEREFORE, CLAIM SHOULD BE ALLOWED. THE AO HOWEVE R DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSERVED BY HIM THA T THE BUYERS IN THE STATEMENT HAD CLEARLY STATED THAT THEY HAD AGRE ED TO PURCHASE THE FLATS ONLY IF THE ALTERATION AS DESIRED BY THEM WA S MADE AND SAID ALTERATIONS HAD BEEN MADE BEFORE TAKING POSSESSION OF TH E FLATS. THE TWO FLATS WHICH WERE JOINED TOGETHER HAD ALSO ONE MAIN DOOR AND THEREFORE, THEY HAD TO BE TREATED AS ONE DWELLING UN IT. THE AREA OF THESE JOINED FLATS WAS THEREFORE, MORE THAN 1000 SQ.FT. . AS REGARDS THE COMMERCIAL AREA, THE AO OBSERVED THAT THE PROVISIONS OF CLAUSE (D) OF ITA NO. 2877/M/10 A.Y.04-05 4 SECTION 80IB(10) PUTTING LIMIT OF 5% OR 2000 SQ.FT. WH ICHEVER IS LESS WAS ONLY APPLICABLE FROM 1.4.2005. THEREFORE, IN PRI OR YEARS, DEDUCTION COULD BE ALLOWED ONLY IF THE BUILDING WAS PU RELY A HOUSING PROJECT. THE AO, THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE. 2.5 THE ASSESSEE DISPUTED THE DECISION OF AO AND REITERAT ED THE SUBMISSION MADE BEFORE AO THAT EACH FLAT WAS HAVING BUI LT UP AREA LESS THAN 1000 SQ.FT. AND COMMERCIAL AREA WAS ALSO WITHIN PERMISSIBLE LIMIT AND ALL OTHER CONDITIONS BEING SATISFIED CLAIM OF DEDUCTION SHOULD BE ALLOWED. CIT(A) HOWEVER ASKED THE ASSESSEE TO PRODUCE THE APPROVAL OF THE LOCAL AUTHORITY REGARDING LAY-OUT PL AN AND N.A. PERMISSION ETC. THE ASSESSEE PRODUCED A COPY OF THE EXEMPTI ON ORDER GRANTED UNDER SECTION 20 OF THE URBAN LAND (CEILING A ND REGULATION) ACT, 1976 DATED 9.12.2003. CIT(A) OBSERVED THAT IN TH E SAID ORDER IT WAS CLEARLY MENTIONED THAT LAY OUT PLAN ETC. HAD TO BE APPROVED BY CONCERNED APPROPRIATE AUTHORITY. WHEN POINTED OUT, TH E ASSESSEE STATED THAT IT DID NOT HAVE SUCH APPROVAL IN POSSESSION. CIT(A) ALSO OBSERVED THAT THE ORDER PRODUCED BY THE ASSESSEE WAS ALSO N OT IN THE NAME OF THE ASSESSEE BUT WAS IN THE NAME OF DHANAJI RA THOD & 4 OTHERS. CIT(A) THEREFORE, CONFIRMED THE DISALLOWANCE MA DE BY AO. AGGRIEVED BY THE SAID DECISION, THE ASSESSEE IS IN APPEA L BEFORE THE TRIBUNAL. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE AO HAD TAKEN THE BUILT-UP AREA OF EACH FLAT IN THE BUILDING A-3, B-3 AND B-4 AT 790 SQ.FT., 510 SQ.FT. AND 510 SQ.FT. RESPECTIVELY WHICH WAS, IN FACT SUPER BUILT-UP AREA. HE REFERRED TO THE SALE AGREEMENT S PLACED IN THE PAPER BOOK TO POINT OUT THAT THE SAID AREA MENTIONED IN THE ORDER OF AO REPRESENTED THE SUPER BUILT-UP AREA ONLY. IT WAS ALSO POINTED OUT ITA NO. 2877/M/10 A.Y.04-05 5 THAT BUILT UP AREA IN EACH FLAT IN THESE BUILDINGS WA S 662.10 SQ.FT., 477.30 SQ.FT. AND 301.90 SQ.FT. RESPECTIVELY. IT WAS ALSO POINTED OUT THAT THE PROJECT WAS LOCATED AT VILLAGE KON, TALUKA BH IWANDI, DIST. THANE WHICH IS 35 KMS FROM THE MUNICIPAL LIMITS OF MUMBA I, AND, THEREFORE, IN RESPECT OF SUCH PROJECTS THE PERMISSIBLE BUI LT UP AREA FOR EACH FLAT WAS 1500 SQ.FT.. THEREFORE, EVEN IF THE TWO FLATS WERE TAKEN TOGETHER, THE BUILT-UP AREA WAS LESS THAN 1500 SQ.FT. A ND ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10). THE LD. AR ALSO REFERRED TO THE DECISION OF THE TRIBUNAL IN CASE OF M/S. G.V. CO RPORATION VS. ITO (38 SOT 174) IN WHICH IT WAS HELD THAT DEDUCTION UNDER SECTION 80IB(10) COULD NOT BE DENIED MERELY BECAUSE NINE OUT O F 140 PURCHASERS HAD DESIRED TO JOIN TWO FLATS FOR MAKING ONE SINGLE DWELLING UNIT. IN THE RESENT CASE, THERE WERE ONLY SIX FLATS WHIC H HAD BEEN JOINED TOGETHER. THE LD. AR FURTHER SUBMITTED THAT, IN RESPECT OF SCHEMES APPROVED PRIOR TO 1.4.2005, THERE WAS NO LIMIT ON COMMERCIAL AREA AS HELD BY THE HON'BLE HIGH COURT OF BOMBAY IN TH E CASE OF CIT VS. BRAHMA ASSOCIATES (333 ITR 289). AS REGARDS THE APPRO VAL, IT WAS SUBMITTED THAT COMPETENT AUTHORITY FOR APPROVING THE PROJECT LAY OUT, PLAN ETC. WAS ASSISTANT DIRECTOR TOWN PLANNING AND THE PROJECT HAD BEEN APPROVED BY THE SAID AUTHORITY. IT WAS POINTED O UT THAT THE ASSESSEE HAD FULFILLED ALL THE CONDITIONS AND IT HAD PROP ER APPROVAL BUT THE CASE HAD NOT BEEN PRESENTED PROPERLY BEFORE THE LO WER AUTHORITIES. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE O RDERS OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE FINDING IN THE RESPECTIVE ORDERS. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING DENIAL OF DEDUCTION UNDER SECTION 80IB(10). THE DEDUCTION UNDER THE SAID SECT ION IS ITA NO. 2877/M/10 A.Y.04-05 6 ALLOWABLE IN RESPECT OF HOUSING PROJECT SUBJECT TO FULFIL LMENT OF CERTAIN CONDITIONS. ONE OF THE CONDITIONS IS THAT BUILT-UP ARE A OF EACH FLAT SHOULD BE LESS THAN 1000 SQ.FT. IN CASE PROJECT LOCATED WI THIN THE MUNICIPAL LIMITS AND 1500 SQ.FT. IN CASE PROJECT LOCATED MORE THAN 25 KMS FROM MUNICIPAL LIMITS. IN THIS CASE, AO HAD NOTED THA T THE ASSESSEE HAD SOLD SIX FLATS WITH TWO FLATS JOINED TOGETHER TO FORM THREE INDEPENDENT DWELLING UNITS. THE ALTERATIONS HAD BEEN MADE BEFORE THE POSSESSIONS HAD BEEN HANDED OVER AND THEREFORE, BUILT UP AREA IN EACH CASE WAS MORE THAN 1000 SQ.FT. IN THE SAID CALCULATION, A O HAD TAKEN THE BUILT-UP AREA OF EACH FLAT IN THE BUILDING A-3, B-3 AND B-4 IN WHICH THE FLATS HAD BEEN JOINED TOGETHER AT 790 SQ.FT., 510 SQ.FT. AND 510 SQ.FT. THE ASSESSEE HAS HOWEVER FILED COPY OF AGREEMENTS IN WHICH IT IS MENTIONED THAT 790 SQ.FT. WAS SUPER BUILT-UP AREA OF E ACH FLAT WHICH ALSO INCLUDED COMMON AREA. THE ASSESSEE HAS ALSO POINTED TH AT BUILT- UP AREA OF EACH FLAT IN THESE BUILDINGS WAS 662.10 SQ.FT ., 477.30 SQ.FT. AND 301.90 SQFT. AND THEREFORE EVEN IF THE TWO FLATS ARE TAKEN TOGETHER, THE BUILT-UP AREA WAS LESS THAN 1500 SQ.FT. A ND ASSESSEE WAS FULFILLING THE CONDITIONS. 4. AS REGARDS THE COMMERCIAL AREA, THERE IS NO LIMIT ON COMMERCIAL AREA IN THE SCHEME IS APPROVED PRIOR TO 1.4.2005 IN VI EW OF THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). THE AO HAS MADE DISALLOWANCE ON THE GRO UND THAT THERE WAS VIOLATION OF THE LIMIT OF 1000 SQ.FT. BASED ON BUILT-UP AREA OF ONE FLAT AND ALSO BECAUSE OF COMMERCIAL AREA IN THE BUIL DING. WE FIND THAT CIT(A) HAS NOT GIVEN ANY FINDING ON THESE RESPECTS AS TO WHETHER THE BUILT-UP AREA WAS IN EXCESS OF THE PRESCRIBED LIMIT A ND WHETHER COMMERCIAL AREA WAS IN VIOLATION OF PROVISIONS. FURTHER , CLAIM OF THE ASSESSEE IS THAT PROJECT WAS LOCATED MORE THAN 25 KMS AWAY FROM THE ITA NO. 2877/M/10 A.Y.04-05 7 MUNICIPAL LIMIT AND, THEREFORE, BUILT-UP AREA OF 15 00 SQ.FT. WOULD APPLY IN RESPECT OF EACH FLAT. THIS ASPECT HAS ALSO NOT BEEN EXAM INED. CIT(A) HAS MADE DISALLOWANCE ON THE GROUND THAT THE PR OJECT DID NOT HAVE PROPER APPROVAL. THE ASSESSEE HAS SUBMITTED THAT THE PROJECT HAD BEEN DULY APPROVED BY THE ASSISTANT DIRECTOR TOWN P LANNING WHO WAS THE COMPETENT AUTHORITY. IN OUR VIEW, MATTER REQ UIRES FRESH CONSIDERATION AT THE LEVEL OF CIT(A) IN VIEW OF THIS C LAIM OF THE ASSESSEE AND ALSO BECAUSE OF THE FACT THAT CIT(A) HAS GIVEN NO FINDING IN RESPECT OF CERTAIN ASPECTS MENTIONED ABOVE. WE, THERE FORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIM FOR NECESSARY EXAMINATION AND FOR PASSING A FRESH ORDER AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.4.2012. SD/- SD/- ( B.R. MITTAL ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 20.4.2012. JV. ITA NO. 2877/M/10 A.Y.04-05 8 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.