Assistant Commissioner of Income-tax, V. Dhanshree Constructions, Pune

ITA 295/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7106 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: K SRINIVASAN
• Keywords: Reopening of assessment
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! ' , $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.295/PUN/2015 ' ' / ASSESSMENT YEAR : 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 9 , PUNE. . / APPELLANT V/S DHANASHREE CONSTRUCTIONS, 19/1/16, TATHAWADE ROAD, DANGE CHOWK, THERGAON, PUNE 411 033. PAN :AAEFD4519R . / RESPONDENT / APPELLANT BY : SHRI ANIL CHAWARE / RESPONDENT BY : SHRI K. SRINIVASAN. ( / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 6, PUNE DT.22.12.2014 FOR THE ASSESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER :- 2.1 ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF CONSTRUCTION. ASSESSEE FILED ITS RETURN OF INCOM E FOR A.Y. 2007-08 ON 27.10.2007 DECLARING TOTAL INCOME OF / DATE OF HEARING : 09.02.2017 / DATE OF PRONOUNCEMENT: 17.02.2017 2 ITA NO.295/PUN/2015 AY.NO.2007-08 RS.6,28,560/-. THE ASSESSMENT WAS INITIALLY FRAMED U/S 14 3(3) VIDE ORDER DT.14.12.2009 AND THE TOTAL INCOME WAS DETE RMINED AT RS.6,48,230/-. THEREAFTER THE CASE WAS RE-OPENED BY ISSU ING NOTICE U/S 148 ON 30.03.2012. IN RESPONSE TO NOTICE, ASS ESSEE SUBMITTED THAT THE RETURN OF INCOME FILED FOR A.Y. 2007-08 DECLARING TOTAL INCOME OF RS.6,28,560/- BE CONSIDERED AS RET URN OF INCOME IN RESPONSE TO NOTICE U/S 148. THEREAFTER THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 VIDE ORDER DT.25.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.4,08,14,850/- BY DISALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE I.T. ACT AMOUNTING TO RS.4,01,86,291/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DT.22.12.2014 (IN APPEAL NO.PN/CIT(A)-6/DCIT CIR-9/161/13-14) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT A.O. CANNOT ASSUME JURISDICTION U/S. 147 ON THE SAM E SET OF FACTS, DESPITE THE FACTS AVAILABLE BEFORE THE AO WAS INCORRECT AND DIFFERENT AT THE TIME OF ORIGINAL ASS ESSMENT AND THE NOTICE ISSUED U/S.148 WAS WITHIN 4 YEARS FR OM THE END OF THE A.Y.? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S.80IB(10) BY NOT APPRECIATING THE F ACT THAT AO WAS CORRECT IN REOPENING THE CASE AS THE OR IGINAL ASSESSMENT U/S.143(3) WAS PASSED ON THE BASIS OF WR ONG INFORMATION PROVIDED BY THE ASSESSEE AND A SINGLE CERTIFICATE OF PCMC FOR BOTH THE SECTORS PRODUCED B EFORE AO ? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN DELETING THE 3 ITA NO.295/PUN/2015 AY.NO.2007-08 DISALLOWANCE U/S.80IB(10) BY IGNORING THE FACT THAT THE PROJECT SPREAD OVER SECTORS A & B IS AN INDIVISIBLE PROJECT AS BOTH THE SECTORS ARE HAVING ADJOINING AREAS AND COMMON ROAD AND COMMON OPEN SPACE, HENCE THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S.80IB(10)? 3. BEFORE US, AT THE OUTSET, LD. D.R. SUBMITTED THAT THOUGH THE REVENUE HAS RAISED VARIOUS GROUNDS BUT THE ONLY IS SUE IS WITH RESPECT TO THE RE-OPENING OF THE ASSESSMENT AND A LLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE I.T. ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD DEVELOPED A PROJECT IN THE YEAR 200 4 AT THERGAON AND THE PROJECT WAS SANCTIONED BY PUNE CHINC HWAD MUNICIPAL CORPORATION (PCMC) VIDE ORDER DT.10.11.2014. IT WA S OBSERVED THAT THE PROJECT WAS DIVIDED INTO TWO SECTOR S A AND B. SECTOR B WAS A COMPLETE HOUSING SECTOR NAMED AS SONIGA RA PARK WHEREAS SECTOR A WAS HOUSING CUM COMMERCIAL SECTOR HAV ING COMMERCIAL SPACE AT 1887.01 SQ. METERS AND NAMED AS LAX MI TARA MARKET. AO NOTICED THAT ASSESSEE HAD CLAIMED DEDU CTION U/S 80IB(10) ON THE PROFITS EARNED FROM SALE OF FLATS IN SECT OR B AND HAD OFFERED THE INCOME EARNED FROM PROFITS EARNED FRO M SECTOR A FOR TAX. AO WAS OF THE VIEW THAT UNDER THE P ROVISIONS OF THE ACT, DEDUCTION FROM PROFITS IS ALLOWED FROM ELIGIBLE HOUSING PROJECT AND NOT FROM SEGMENTS OF A BIGGER HOUSING PROJE CT CONSISTING OF HOUSING SEGMENT AND HOUSING SEGMENT CUM COMMERCIAL SEGMENT. HE ALSO NOTICED THAT BOTH THE SECTO RS A AND B ARE ADJOINING AREAS HAVING A COMMON ROAD AND COM MON SPACE AND THE PROJECT WAS INDIVISIBLE PROJECT WHICH ACCOR DING TO 4 ITA NO.295/PUN/2015 AY.NO.2007-08 AO THE ASSESSEE HAD DIVIDED THE SECTORS INTO TWO IN ORD ER TO CLAIM DEDUCTION U/S 80IB(10) OF THE ACT. HE FURTHER NOTIC ED THAT IN THE HOUSING PROJECT, THE COMMERCIAL AREA WAS MORE THA N 20,492.82 SQ.FT., WHICH WAS IN EXCESS OF 2000 SQ. FT. OVER TH E UPPER LIMIT. HE THEREFORE HELD THAT THE ASSESSEE WAS NO T ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT AND ACCORDINGLY DEN IED THE CLAIM OF DEDUCTION. AGGRIEVED BY THE ORDER OF AO, ASSESS EE CARRIED THE MATTER BEFORE LD. CIT(A), WHEREIN APART FROM TH E MERITS OF THE DENIAL OF DEDUCTION, ASSESSEE ALSO CHALLENGED T HE RE-OPENING OF THE ASSESSMENT. THE LD. CIT(A) HELD THAT AO WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S 147 AND EVEN ON MERITS, DECLARED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A S WELL AS REPLY OF THE APPELLANT. IN THIS CASE ORIGIN ALLY ASSESSMENT U/S. 143(3) OF INCOME-TAX ACT WAS COMPLETED ON 14.12.2009. HOWEVER, SINCE NOTICE U/S. 148 OF INCOME-TAX ACT, 1961 WAS ISSUED ON 30.03.2012, PROVISO TO SEC.147 OF INCOME-TAX ACT, 1961 WILL NOT COME INTO OPERATION AS NOTICE U/S. 14 8 WAS ISSUED WELL WITHIN 4 YEARS FROM THE END OF THE ASSESSMENT YEAR I.E. A.Y. 2007-08. THEREFORE, THE APPELLANT'S CLAIM THAT THERE WAS NO FAILURE ON THE PART OF THE APPELLANT AS STIPULATED IN THE SAID PROVISO DOES N OT REQUIRE TO BE ADJUDICATED. ACCORDINGLY, I DO NOT FIND ANY MERIT IN THE GROUND NO.2 TAKEN BY THE APPELLANT. ACCORDINGLY, THE SAME IS DISMISSED. 6. AS REGARDS, REOPENING OF AN ASSESSMENT ON THE SA ME SET OF FACTS, IT IS SEEN THAT THE ASSESSING OFFICER EXAMINED THE ISSUE OF DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT WHILE COMPLETING ORIGINAL ASSESSMENT ORDER U/S. 143 (3) OF INCOME-TAX ACT AND ACKNOWLEDGE THE EXISTENCE OF TWO PROJECTS. THE RELEVANT DISCUSSION IS IN PARA 2 OF T HE ASSESSMENT ORDER WHICH READS AS UNDER: ' THE ASSESSEE IS A BUILDER & HAS DEVELOPED 2 PROJECTS. ONE OF THE PROJECT IS A COMMERCIAL PROJEC T & OTHER ONE IS A PROJECT ELIGIBLE FOR DEDUCTION U/S. 80IB(10) OF THE IT ACT, 1961. THE ASSESSEE IS 5 ITA NO.295/PUN/2015 AY.NO.2007-08 MAINTAINING SEPARATE RECORDS FOR THE PROJECTS BEING DEVELOPED BY IT. AFTER TAKING INTO THE CONSIDERATIO N THE DETAILS FILED AND DISCUSSION WITH THE ASSESSEE' S REPRESENTATIVE THE ISSUE ARISING IN THIS CASE ARE DECIDED AS UNDER' 7 . THUS, FROM THE ABOVE ORDER, IT IS CLEAR THAT THE ASSESSING OFFICER EXAMINED AND ACKNOWLEDGED THE EXISTENCE OF TWO PROJECTS. THE APPELLANT IS RIGHT I N POINTING OUT THAT REOPENING WAS DONE ON THE SAME SET OF FACT S AS NO NEW MATERIAL CAME TO THE POSSESSION OF THE ASSES SING OFFICER TO ENABLE HIM TO EXERCISE JURISDICTION OVER SEC.147 OF INCOME-TAX ACT. IT IS AN ESTABLISHED LAW THAT TH E ASSESSING OFFICER CANNOT ASSUME JURISDICTION U/S. 147 OF INCOME-TAX ACT ON THE SAME SET OF FACTS WITHOUT BRI NGING ANY NEW MATERIAL ON RECORD TO SHOW THAT CERTAIN INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC.147 OF INCOME-TAX ACT. THEREFORE, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S. 147 OF INCOME-TAX ACT. ACCORDINGLY, GROUND NO.1 IS ALLOWED. 5. ON THE MERITS OF THE CLAIM OF DEDUCTION U/S 80IB(10), LD. CIT(A) HELD AS UNDER : 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE THE ST AND OF THE ASSESSING OFFICER DENYING DEDUCTION U/S.80IB(10) OF INCOME-TAX ACT WILL NOT SURVIVE DUE TO FOLLOWING GR OUNDS: I. THE ASSESSING OFFICER IN HIS ORIGINAL ASSESSMENT ORDER DATED 14.12.2009 HAS ACKNOWLEDGED THE EXISTENCE OF TWO PROJECTS. II. THE PROJECT AS SUCH HAS NOT BEEN DEFINED IN THE IT ACT AND THEREFORE THE ACKNOWLEDGEMENT OF TWO PROJECTS BY PCMC HAS TO BE GIVEN WEIGHT. III. THE FACT THAT APPROVALS FOR BOTH THE PROJECTS HAVE GIVEN BY TWO ORDERS BEARING SAME SERIAL NUMBER & DATE WILL NOT MAKE ANY DIFFERENCE IN THIS REGARD AS THE SAME MAY BE DUE TO PCMC AUTHORITIES MAINTAIN SAME FILE IN RESPECT OF SAME SET OF PLOTS. IV. EVEN IF BOTH THE PROJECTS ARE TREATED AS SINGLE ONE, THE DEDUCTION U/S. 80IB(10) OF INCOME-TAX ACT, 1961 WILL BE ALLOWED AS THE PROJECT WAS APPROVED PRIOR TO 0L.04.2005 AS PER RATIO OF DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES(2011) 333 ITR 289. V. THE APPELLANT'S CLAIM OF DEDUCTION U/S. 801B(10) OF INCOME- TAX ACT WAS ALLOWED BY HON'BLE PUNE 6 ITA NO.295/PUN/2015 AY.NO.2007-08 ITAT IN A.Y. 2009-10 IN RESPECT OF SAME PROJECT THOUGH ON DIFFERENT GROUND. 11 . ACCORDINGLY, IT IS HELD THAT THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN DISALLOWING CLAIM U/S 80IB(10) OF INCOME TAX ACT, 1961 AMOUNTING TO RS.4,01,86,291/-. ACCORDINGLY, HE IS DIRECTED TO DELETE THE ADDITION. THUS, GROUND NO.4, 5 AND 6 ARE ALLOWED. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN AP PEAL BEFORE US. 6. BEFORE US, LD.D.R. TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND SU PPORTED THE ORDER OF LD. CIT(A) AND FURTHER SUBMITTED THAT IN THE PRESENT CASE SINCE THE PROJECT WAS APPROVED BY PCMC PRIOR TO 01.04.2005 AND THEREFORE IN VIEW OF THE DECISION OF APEX CO URT IN CASE OF CIT VS. SARKAR BUILDERS (2015) 375 ITR 392, NO INTERFERENCE TO THE ORDER OF LD. CIT(A) IS CALLED FOR. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO RE-OPENING OF THE ASSESSMENT AND THE ALLOWING OF DEDUC TION U/S 80IB(10) OF THE ACT. WE FIND THAT LD. CIT(A) WHILE DECIDIN G THE ISSUE ON REOPENING OF ASSESSMENT HAS GIVEN A FINDING T HAT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAD EXAMINED AND ACKNOWLEDGED THE EXISTENCE OF TWO PROJ ECTS AND THAT THE RE-OPENING WAS DONE ON THE SAME SET OF FACTS AND NO NEW MATERIAL HAD COME TO THE POSITION OF AO TO ENABLE HIM TO EXERCISE JURISDICTION U/S 147 OF THE ACT AND THEREFORE RE -OPENING WAS HELD TO BE BAD IN LAW. ON THE MERITS OF ALLOWING DEDUCT ION U/S 80IB(10), HE HAS GIVEN A FINDING THAT SINCE THE PROJECT WAS 7 ITA NO.295/PUN/2015 AY.NO.2007-08 APPROVED BY PCMC PRIOR TO 01.04.2005 AND IN VIEW OF THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. B RAHMA ASSOCIATES (2011) 333 ITR 289, THE CLAIM OF DEDUCTION U/S 80IB(10) WAS ALLOWABLE TO ASSESSEE. ON THE ISSUE WHERE T HE LIMIT OF COMMERCIAL AREA OF 2000 SQ. FT AS PRESCRIBED U/S 80IB(10) EXCEEDS FOR THE PROJECTS WHICH ARE APPROVED PRIOR TO 0 1.04.2005, WE FIND THAT THE HONBLE APEX COURT IN THE CASE OF CIT V S. SARKAR BUILDERS (SUPRA) HAS HELD AS UNDER (HEAD NOTES) : HOUSING PROJECT SPECIAL DEDUCTION CHANGE OF LA W WITH EFFECT FROM APRIL 1, 2005 BENEFIT RESTRICTED TO C ASES WHERE AREA UTILIZED FOR SHOPS AND COMMERCIAL ESTABLISHMENTS DOES NOT EXCEED 5 PER CENT OF AGGREG ATE BUILT-UP AREA OF HOUSING PROJECT OR 2,000 SQ.FEET, WHICHEVER WAS LESS NOT TO APPLY TO PROJECTS WHERE APPROVAL OF LOCAL AUTHORITY GRANTED PRIOR TO APRIL 1, 2005 EVEN IF PROJECT COMPLETED THEREAFTER INCOME TAX A CT, 1961, SEC.80-IB(10). 8. BEFORE US, REVENUE HAS NOT PLACED ANY CONTRARY BINDIN G DECISION IN ITS SUPPORT NOR HAS CONTROVERTED THE FINDINGS OF LD. CIT(A). CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE FIN D NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUNDS OF REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 17 TH DAY OF FEBRUARY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE; ! DATED : 17 TH FEBRUARY, 2017. YAMINI 8 ITA NO.295/PUN/2015 AY.NO.2007-08 ( ) *!+, -,! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. COMMISSIONER OF INCOME TAX-5, PUNE. COMMISSIONER OF INCOME TAX (A) -9, PUNE. #$% &&'(, * '(, / DR, ITAT, A PUNE; %+, - / GUARD FILE. ( / BY ORDER, // //// // TRUE COPY // T // // TRUE // //COPY // // TRUE COPY // . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.