ASST CIT CEN CIR 17 &28, MUMBAI V. NIRMAL LIFESTYLE INDIA P. LTD, MUMBAI

ITA 2957/MUM/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9157 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 09-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2011
• Court: TRIBUNAL
• Department Lawyers: IN CIRCUMSTANCES OF CA SE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER ITA NO. 2957/MUM/2011 ASSESSMENT YEAR: - 2007 - 08 ITA NO. 2958/MUM/2011 ASSESSMENT YEAR: - 2008 - 09 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 17 & 28, ROOM NO. 401, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 20. VS.` M/S NIRMAL LIFESTYLE INDIA PVT. LTD. DR. R.P. ROAD, MULUND (WEST), MUMBAI 400 08 0 . PAN: - AA CCN5001H APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A) BOTH DATED 24.01.2011 FOR THE A.Y. 2007 - 08 AND 2008 - 09 RESPECTIVELY. THE REVENUE HAS RAISED COMMON GROUNDS IN THESE APPEALS . THE GROUND S RAISED FOR A.Y. 2007 - 08 ARE AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW PROPORTIONATE DEDUCTION OF 80IB(10) ON FLATS WHICH ARE HAVING BUILT UP AREA OF BELOW 1000 SQ. FT. REVENUE BY SHRI SURINDER JEET SINGH ASSESSEE BY SHRI BHUPENDRA SHAH DATE OF HEARING 16.03.2015 DATE OF PRONOUNCEMENT 25 .03.2015 M/S NIRMAL LIFESTYLE INDIA PVT. LTD. 2 | P A G E ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) HAS FAILED TO APPRECIATE THAT THE CONDITIONS OF 80IB(10) HAVE NOT BEEN FULFILLED FOR THE WHOLE PROJECT/BUILDING AND CANNOT BE APPROVED IN PIECEMEAL FOR SOME FLATS IN THE BUILDING. 2. THE ASSESSEE FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL AND COMMERCIAL PROPERTIES AND CLAIMED DEDUCTION U/S 80IB(10) . DURING THE ASSESSMENT PRO CEEDINGS U/S 143(3) R.W.S 153A, T HE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CONSTRUCTED VARIOUS HOUSING UNITS HAVING BUILT UP AREA MORE THAN 1,000 SQ. FT., THEREFORE , THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80 - IB(10) . ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 80 - IB(10). 3. ON APPEAL, THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON PROPORTIONATE BASIS FOR FLAT , IN WHICH THE BUILT UP AREA IS LESS THAN 1,000 SQ. FT. 4. BEFORE US, THE LD. DR HAS VEHEMENTLY CONTENDED THAT THE CONDITION PRESCR IBED IN CLAUSE ( C ) OF SECTION 80 - IB(10) IS FOR THE MAXIMUM PERMISSIBLE AREA OF A RESIDENTIAL UNIT AND, THEREFORE, IF THERE IS A VIOLATION OF CON DITION PRESCRIBED U/S 80 - IB(10), T HE PROJECT OF THE ASSESSEE BECOMES INELIGIBLE FOR DEDUCTION U/S 80 - IB(10). IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWIN DECISION OF CO - ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASE OF ACIT VS. EKTA SANKALP DEVELOPERS DATED 12.09.2014 IN ITA NO. 3316 AND 3318 OF MUMBAI 2012 AND SUBMITTED THAT THE TRIBUNAL HAS OBSERVE D THAT THERE IS NO SCOPE OF ANY PROPORTIONATE ALLOWANCE OF DEDUCTION U/S 80 - IB(10) AS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES 333 ITR 289. M/S NIRMAL LIFESTYLE INDIA PVT. LTD. 3 | P A G E 5. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004 - 05 TO 2006 - 07 VIDE ORDER DATED 19 - 10 - 2012 AND, THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THIS TRIBUNAL. HE HAS RELIED UPON THE FOLLOWING JUDGMENTS: - 1. ACIT V/S SHETH DEVELOPERS (P) LTD. 33 SOT 277(BOM) 2. SHREEJI BALAJI DEVELOPERS ITA NO. 2592/MUM/2006 3. BENGAL AMBUJA HOUSING DEVELOPMENT LTD VS. DC ITA NO. 735/KOL/2005 4. BENGAL AMBUJA HOUSING DEVELOPMENT LTD VS. DC ITA NO. 458 DISMIS SED BY CAL HC. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THERE ARE SERIES OF DECISIONS OF THIS TRIBUNAL, WHEREIN, THE TRIBUNAL HAS HELD THAT IN CASE OF CERTAIN DWELLING UNITS EXCEEDS THE AREA PRESCRIBE D U/S 80 - IB(10) THEN THE ASSESSEE WOULD BE ELIGIBLE FOR DEDUCTION PROPORTIONATELY TO THE EXTENT OF THE DWELLING UNIT HAVING THE CONSTRUCTED AREA LESS THAN THE LIMIT PROVIDED IN THE SECTION. WE FURTHER NOTE THAT EVEN IN CASE OF ACIT VS. EKTA SANKALP DEVELO PERS (SUPRA), THE TRIBUNAL HAS OBSERVED AND HELD IN PARA 5 AS UNDER: - 5. WE, FACED WITH THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), WHICH IS EVEN OTHERWISE BINDING ON US, PROCEEDED BY FIRSTLY EXAMINING THE REVENUES RELIANCE THEREON, TO FIND IT AS VALID. THE HONBLE HIGH CO URT, UPON BEING CALLED UPON TO EXAMINE THE PROVISION OF SECTION 80 - IB(10) WITH REFERENCE TO THE INGREDIENTS OF AN ELIGIBLE HOUSING PROJECT, A TERM WHICH STANDS NOT DEFINED UNDER THE ACT, CLARIFIED THAT THE HOUSING PROJECT AS CONTEMPLATED IS ONLY A HOUS ING PROJECT AS APPROVED BY THE LOCAL AUTHORITY, TO WHICH (APPROVAL) THE PROVISION REFERS TO, SO THAT THE SAME, WHERE NOT VIOLATIVE OF ANY OF THE CONDITIONS LISTED IN THE PROVISION, AS WITH REGARD TO THE EXTENT OF COMMERCIAL USER (WHICH CONDITION DID NOT EX IST IN THE PROVISION AS IT STOOD AT THE RELEVANT TIME), COULD NOT BE IMPOSED BY JUDICIAL DIKTAT. FURTHER, THE PROJECT, AS APPROVED, IS A SINGLE PROJECT, WHICH EITHER SATISFIES THE CONDITIONS ENLISTED IN THE PROVISION OR NOT. THERE WAS THEREFORE NO SCOPE FO R BIFURCATING ITS PROFITS INTO THAT SUBJECT TO DEDUCTION THERE - UNDER AND NOT SO. THE FOLLOWING WORDS CAPTURE THE DECISION, WHICH M/S NIRMAL LIFESTYLE INDIA PVT. LTD. 4 | P A G E FOLLOWS A COMPREHENSIVE DISCUSSION ON THE VARIOUS ASPECTS, AND IN HARMONY AND AGREEMENT WITH ITS UNDERSTANDING, OF THE MATTER : (REFER PARA 31 AT PGS. 302 - 303, ALSO CATCH NOTES AT PGS. 290 - 291) SECTION 80 - IB(10) ALLOWS DEDUCTION TO THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND NOT TO A PART OF THE PROJECT. IF THE CONDITIONS SET OUT IN SECTION 80 - IB(10) ARE SATISFIED, THEN DEDUCTION IS ALLOWABLE ON THE ENTIRE PROJECT APPROVED BY THE LOCAL AUTHORITY AND THERE IS NO QUESTION OF ALLOWING DEDUCTION TO THE PART OF THE PROJECT. [EMPHASIS OURS] THAT THE SAME IS RENDERED UPON EXAMINING THE PROVISION IN A DIFFERENT CONTEXT WO ULD BE OF NO MOMENT, WHICH THOUGH PREVAILED WITH THE TRIBUNAL IN THE CASE OF EKTA HOUSING (P.) LTD. (SUPRA) (COPY ON RECORD) IN - AS - MUCH AS IT IS TRITE LAW THAT IT IS THE RATIO OF THE DECISION WHICH IS BINDING AND HAS PRECEDENT VALUE. THE SAID ORDER BY THE TRIBUNAL, IN - SO - FAR AS IT DOES NOT STATE ANY LEGAL REASONS FOR SO DEVIATING, IS, WITH RESPECT, CLEARLY INCONSISTENT WITH THE EXPRESS AND CLEAR VERDICT BY THE HONBLE JURISDICTIONAL HIGH COURT AS EXTRACTED HERE - IN - ABOVE. THE OTHER DECISIONS BY THE TRIBUNAL BEING RELIED UPON BY THE ASSESSEE, RENDERED WITHOUT CONSIDERING THE DECISION BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA), ARE ALSO THUS APPARENTLY IN CONFLICT THEREWITH IN - AS - MUCH AS THE SAME OPINE IN FAVOUR OF DEDUCTION, WHICH EXTENDS TO THE ENTIRE PROFIT OF THE PROJECT, WITH REFERENCE TO THE PROFIT ATTRIBUTABLE TO THE RESIDENTIAL UNITS SATISFYING THE CONDITION OF SECTION 80 - IB(10)(C), I.E., TO A PART OF THE PROJECT. THE PROPOSITION IS EVEN OTHERWISE INCONSISTENT WITH THE FUNDAMENTAL PRINCIPLE THAT A NY DEDUCTION IS SUBJECT TO ELIGIBILITY, I.E., SATISFACTION OF EACH OF THE CONDITIONS PRECEDENT. FURTHER, OUR READING OF THOSE DECISIONS BY THE TRIBUNAL, DID NOT EXHIBIT ANY DISCUSSION ON OR AN INTERPRETATION OF SECTION 80 - IB(10)(C), AS INDEED WAS ALSO THE CASE FOR THE JUDGMENT BY THE HONBLE COURT IN BRAHMA ASSOCIATES (SUPRA). THE PROVISION IS ACCORDINGLY EXAMINED CLOSELY, TO FIND CLAUSE (C) AS WORDED DIFFERENTLY FROM THE OTHER CLAUSES OF SECTION 80 - IB(10), SETTING FORTH THE CONDITIONS PRECEDENT FOR THE EL IGIBILITY TO DEDUCTION OF THE PROFITS OF THE PROJECT. THE SAID CLAUSE, ON A FAIR CONSTRUCTION, WAS FOUND TO CONTAIN A CONDITION WITH REFERENCE TO THE RESIDENTIAL UNIT COMPRISING THE HOUSING PROJECT. THE CONDITION, BY NECESSARY IMPLICATION, APPLIES TO ALL T HE RESIDENTIAL UNITS OF THE HOUSING PROJECT. THE CONVERSE, HOWEVER, CANNOT BE SAID TO HOLD, SO THAT ONLY SUCH HOUSING PROJECT, ALL THE RESIDENTIAL UNITS COMPRISING WHICH SATISFY THE CONDITION OF SECTION 80 - IB(10)(C), IS AN ELIGIBLE PROJECT. THE WORD PROJE CT, CLEARLY MENTIONED IN EACH OF THE OTHER CLAUSES, IS CONSPICUOUS BY ITS ABSENCE IN CLAUSE (C). THAT IS, S. 80 - IB(10)(C) REPRESENTS A CONDITION PRECEDENT QUA THE RESIDENTIAL UNIT COMPRISING THE HOUSING PROJECT AND NOT QUA THE PROJECT; ITS LANGUAGE NOT AD MITTING OF SUCH A VIEW. WE MAY THOUGH AT ONCE CLARIFY THAT THE DECISION BY THE HONBLE COURT BEING BINDING, WE WOULD NOT HAVE FOR A MOMENT HESITATED TO HOLD OTHERWISE IF WE FOUND ANYTHING TO SO SUGGEST IN THE DECISION IN BRAHMA ASSOCIATES (SUPRA), WHICH IS SANS ANY REFERENCE TO S. 80 - IB(10)(C), OR IF THAT MEANING OR INTENTION WAS FOUND EXPRESSED IN ITS PLAIN LANGUAGE; IT BEING TRITE THAT THERE IS NO EQUITY ABOUT TAX AND THERE IS NO ROOM FOR INTENDMENT, SO THAT ONE HAS TO LOOK FAIRLY AT THE LANGUAGE USED, EV EN AS EXHORTED TIME AND AGAIN BY THE APEX COURT. ALSO, FISCAL STATUTES ARE TO BE STRICTLY INTERPRETED, AND SO ARE THE EXEMPTION PROVISIONS. IT IS ONLY ONCE AN ENTITY OR INCOME, WHICH IS THE SUBJECT MATTER OF EXEMPTION, IS FOUND, ON SUCH CONSTRUCTION, TO BE WITHIN THE AMBIT OF THE PROVISION, THAT A LIBERAL APPROACH IS TO BE ADOPTED TOWARD EFFECTUATING THE OBJECT OF THE PROVISION, FOR WHICH WE MAY REFER TO BAJAJ TEMPO LTD. VS. CIT [1992] 196 ITR 188 (SC) RELIED UPON BY THE TRIBUNAL IN THE VARIOUS ORDERS, AS F AR AS APPEARS ON A READING OF THEIR EXTRACTS AS LISTED IN THE TRIBUNALS ORDER FOR A.Y. 2007 - 08 (SUPRA). THE INTERPRETATION IS ALSO IN ACCORD WITH A PURPOSIVE AND LIBERAL APPROACH, M/S NIRMAL LIFESTYLE INDIA PVT. LTD. 5 | P A G E ADVOCATED BY THE APEX COURT IN, INTER ALIA, BAJAJ TEMPO LTD. (SUPRA). THE P ROVISION BEING AN INCENTIVE PROVISION, TOWARD PROMOTING THE GROWTH OF AFFORDABLE HOUSING IN THE COUNTRY, THE CONSTRUCTION ENABLES THE SAME, WHILE AT THE SAME TIME OPERATING TO EXCLUDE THE EXTENSION OF THE INCENTIVE TO HOUSING THAT IS NOT COVERED OR TARGETE D BY THE PROVISION, AS SOUGHT TO BE INCLUDED BY THE LD. AR. AGAIN, IT IS TRITE LAW THAT THE BENEFIT OF ANY AMBIGUITY, IF ANY, IN THE LANGUAGE OF THE PROVISION, SO THAT TWO REASONABLE VIEWS ARE PERMISSIBLE, IS TO GO TO THE TAX PAYER. WE MAY CLARIFY THAT OU R DECISION, EVEN AS SOUGHT TO BE EMPHASIZED EARLIER, DESPITE APPROVING THE PROPORTIONATE DEDUCTION, I.E., W.R.T. SECTION 80 - IB(10)(C), IS, FOR THE REASONS AFORE - STATED, THUS NOT IN CONFLICT WITH THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN BRAH MA ASSOCIATES (SUPRA). THE DEDUCTION TOWARD THE RESIDENTIAL UNITS SATISFYING THE CONDITION OF S. 80 - IB(10)(C), ARRIVED AT ON A PROPORTIONATE BASIS, IS THEREFORE UPHELD. 7. THUS IT IS CLEAR THAT THE TRIBUNAL IN CASE OF ACIT VS. EKTA SANKALP DEVELOPERS (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE DO NOT FIN D ANY MERIT IN THE CONTENTION OF LD. DR. IT IS PERTINENT TO NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004 - 05 TO 2006 - 07 VIDE ORDER DATED 19.10.2012 IN PARA 5 - 6 A S UNDER : - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL PUT BEFORE US. IN THE CASE OF JAHANGIR HC JAHANGIR (ITA NO. 2050/MUM/2009 AY 2005 - 06 WE HAVE, ON 16 - 05 - 2012, DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE. IN THAT CASE, WE HAVE RELIED UPON THE ORDER OF THE NAGPUR BENCH IN THE CASE OF AIR DEVELOPERS [122 ITD125 (NAG)] AND THIRD MEMBER DECISION IN THE CASE OF SANGHVI & DOSHI ENTERPRISES, CHENNAI BENCH (131ITD151).WE HAD ALSO DISCUSSED THE C ASE OF BAHDL, WHILE DECIDING THE ISSUE. 6. AFTER REFERRING TO THESE DECISIONS, FINALLY, IT WAS HELD THAT ASSESSEE WAS ENTITLED TO PROPORTIONATE ALLOWANCE U/S. 80IB(10) OF THE ACT. WE DO NOT SEE ANY REASON TO DISAGREE WITH OUR EARLIER ORDER.UPHOLDING THE OR DER OF THE FAA, WE REJECT THE GROUNDS OF APPEAL FILED BY THE AO. 8. SINCE THE ISSUE IS A RECURRING ISSUE AND WE FIND THAT EVEN IF THE PROPORTIONATE AREA OF PLOT IS EXCLUDED FROM THE TOTAL AREA OF THE PLOT OF THE PROJECT ALL OTHER CONDITIONS PRESCRIBED U/S 80 - IB(10) INCLUDING THE SIZE OF THE PLOT ARE SATISFIED. ACCORDINGLY FOLLOWING THE EARLIER ORDER OF THIS M/S NIRMAL LIFESTYLE INDIA PVT. LTD. 6 | P A G E TRIBUNAL AS WELL AS IN VIEW OF THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD VS. DC (SUPRA), WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF CIT(A) ALLOWING THE PROPORTIONATE DEDUCTION U/S 80 - IB(10). 9 . IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE DISMISSED . ORDER PRONOUCNED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH 2015 SD/ - SD/ - ( N.K. BILLAIYA ) (VIJAY PAL RAO) ( ACCOUNTANT MEMBER ) (JUDICIAL MEMBER ) MUMBAI DATED 25 .03.2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI