ACIT, New Delhi V. M/s. Raheja Developers Pvt. Ltd, New Delhi

ITA 3004/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58480 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 12-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 26-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUDESH GARGDR
• Assessee Lawyers: PANKAJ JAIN; GURJEET SINGHARS
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SHRI U.B.S. BEDI, JM & SHRI A.N. PAHUJA, AM ITA NO.3004/DEL./2009 ASSESSMENT YEAR: 2006-07 A.C.I.T.,CIRCLE-15(1), CR BUILDING ,IP ESTATE,NEW DELHI V/S . M/S RAHEJA DEVELOPERS PVT. LTD., E-6, GROUND FLOOR, SAKET, NEW DELHI [PAN: AAACR 0468 E] (APPELLANT) (RESPONDENT) ITA NO.4199/DEL./2010 ASSESSMENT YEAR: 2007-08 A.C.I.T.,CENTRAL CIRCLE-II, FARIDABAD V/S . M/S RAHEJA DEVELOPERS PVT. LTD., 215-216,D- 4,RECTANGLE ONE,DISTRICT CENTRE, SAKET, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI PANKAJ JAIN & GURJEET SINGH,ARS REVENUE BY SHRI SUDESH GARG,DR DATE OF HEARING 12-01-2012 DATE OF PRONOUNCEMENT 12-01-2012 O R D E R A.N.PAHUJA:- THESE TWO APPEALS FILED ON 26.06.2009 FOR THE AY 2 006-07 AND ON 10.09.2010 FOR THE AY 2007-08 BY THE REVENUE AG AINST TWO SEPARATE ORDERS DATED 15.04.2009 & 20.05.2010 OF THE LEARNED CIT(A) -XVIII, NEW DELHI, RAISE THE FOLLOWING GROUNDS:- I.T.A. NO.3004/D/2009[AY 2006-07] 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF ` ``1,56,64,966/- 80IB OF THE I.T. ACT WITHOUT APPREC IATING THE FACT THAT ASSESSEE HAS FAILED TO FULFILL THE CONDIT IONS REQUIRED FOR CLAIMING SUCH DEDUCTION. ITA NO.3004/DEL./2009 & ITA NO.4199/DEL./2010 2 2. THE APPELLANT CRAVES TO BE ALLOWED TO AMEND, DEL ETE OR ADD ANY OTHER GROUNDS OF APPEAL DURING THE COURSE OF HE ARING OF THIS APPEAL. I.T.A. NO.4199/D/2010[AY 2007-08] 1) THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON FACT OF THE CASE IN ALLOWING THE DEDUCTION CLAIMED BY TH E ASSESSEE U/S 80IB FOR ` ``3,67,15,247/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO FULFILL THE CONDITIONS REQUIRED FOR CLAIM OF SUCH DEDUCTION. 2) THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 3) IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. FACTS ,IN BRIEF, AS PER RELEVANT ORDERS FOR THE AY 2006-07 ARE THAT RETURN DECLARING INCOME OF ` ` `10,61,77,169/- FILED ON 28 TH NOVEMBER, 2006 BY THE ASSESSEE, CARRYING ON THE BUSINESS OF BUILDERS ,WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ISSUED ON 13 TH NOVEMBER, 2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOT ICED THAT THE ASSESSEE CLAIMED DEDUCTION OF ` ` ` 1,56,64,966/-U/S 80IB OF THE ACT. AFTER HAVING THE DETAILS OF HOUSING PROJECT AND THE AUDITORS CERTIFICATE IN SUPPORT OF CLAIM FOR DEDUCTION, ON PERUSAL OF THE BUILDING PLAN, THE AO NOTICED THA T THE BLOCK D OF APARTMENTS, MEANT FOR THE GOVERNMENT EMPLOYEES CO-OPERATIVE HOU SE BUILDING SOCIETY, JHARSA, GURGAON, WAS APPROVED BY HUDA, PUNCHKULA AS A WHOLE HOUSING AS WELL AS COMMERCIAL PROJECT AND THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT ON PROFITS ON SALE OF 165 FLATS TO THE AFOR ESAID SOCIETY THE COLLABORATION AGREEMENT WITH THE SAID SOCIETY ENTERED ON 29.02.20 04 REVEALED THAT THE ASSESSEE, TERMED AS A DEVELOPER AND THE SAID SOCIE TY, JOINTLY DEVELOPED THE TOWNSHIP IN THE LAND ADMEASURING 4.164 HECTARES BEL ONGING TO THE SOCIETY. THE DEVELOPER HAD TO BEAR ALL THE EXPENSES AND PROVIDE TECHNICAL KNOWHOW TO ITA NO.3004/DEL./2009 & ITA NO.4199/DEL./2010 3 COMPLETE THE PROJECT, HAVING 165 FLATS, COMPRISING THREE BEDROOMS AND DRAWING AND DINING SET ADMEASURING 1040 TO 1060 SQ. FT. OF CARPET AREA AND 1400 SQ. FT. SUPER AREA IN FIVE STOREY APARTMENTS PLUS STILTS IN BLOCKS CONSTRUCTED OVER PART OF LAND IN THE SAID PROJECT. ACCORDING TO THE AO, CAR PET AREA OF EACH OF THE FLAT BEING 1040 TO 1060 SQ. FT AND CONSEQUENTLY, BUILT U P AREA OF EACH FLAT BEING MORE THAT 1000SQ. FT, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 80IB(10) OF THE ACT EVEN WHEN THE AUDITORS SUBMITTED A CERTIFICATE MENTIONING THAT BUILT UP AREA OF EACH OF THE 165 FLATS WAS 998.35 SQ. FT. 2.1 LIKEWISE, THE AO DENIED THE CLAIM FOR DEDUCTION OF ` ` 3,67,15,247/- U/S 80IB (10) OF THE ACT IN THE AY 2007-08. 3 ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF TH E ASSESSEE IN THE AY 2006-07 IN THE FOLLOWING TERMS:- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE RELEVANT PROVISIONS OF THE LAW. I AGREE WITH THE C ONTENTION OF THE APPELLANT THAT FOR THE PURPOSE OF DEDUCTION U/S 80I B OF THE ACT, THE ASSESSING OFFICER HAS LOOKED INTO WHAT HAS BEEN ACT UALLY BUILT BY THE APPELLANT AND NOT AS PER THE AREA SHOWN IN THE AGREEMENT DATED 29 TH FEBRUARY, 2004 WHICH WAS SUBJECT TO VARIOUS MODIFICATIONS AND SANCTIONING OF THE PLAN BY THE CO MPETENT AUTHORITIES. SO MUCH SO, EVEN THE BUILT UP AREA FO R THE PURPOSE OF DEDUCTION U/S 80IB HAS TO BE CALCULATED IN ACCORDAN CE WITH THE DEFINITION PROVIDED UNDER THE ACT. UNDER SUB-SECTI ON 14 OF SECTION 80IB, THE BUILT UP AREA MAKES THE INNER MEASUREMENT OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL INCLUDING THE P ROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WAL LS BUT DOES NOT INCLUDE COMMON AREA SHARED WITH OTHER RESIDENTIAL U NITS. KEEPING INTO CONSIDERATION, SUCH DEFINITION OF BUI LT UP AREA, THE BUILT UP AREA OF THE RESIDENTIAL UNIT HAS BEEN WORKED OUT AT 998.35 SQUARE FEET WHICH HAS ALSO BEEN DULY MENTION ED BY THE AUDITORS IN THEIR REPORT ON FORM NO.10-CCB. THE AS SESSING OFFICER INSTEAD OF LOOKING AT THE AUDITORS REPORT HAS DISA LLOWED THE DEDUCTION ON THE BASIS OF AGREEMENT DATED 29 TH FEBRUARY, 2004, WHICH WAS YET TO BE TRANSFORMED INTO REALITY. THER EFORE, LOOKING INTO THE BUILT UP AREA, AS DEFINED IN SUB-SECTION (15) O F SECTION 80IB AND AS CERTIFIED BY THE AUDITORS IN THEIR REPORT, THE R EQUISITE CONDITIONS TO ITA NO.3004/DEL./2009 & ITA NO.4199/DEL./2010 4 CLAIM THE DEDUCTION U/S 80IB HAVE BEEN FULLY COMPLI ED WITH BY THE APPELLANT. ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT IS ELIGIBLE F OR DEDUCTION U/S 80IB AND, THEREFORE, THE APPEAL OF THE APPELLANT ON THIS GROUND IS ALLOWED. THE ASSESSING OFFICER IS DIRECTED ACCORDI NGLY. 3.1 SIMILARLY, IN THE AY 2007-08, THE LD. CIT(A), FOLLOWING HIS DECISION FOR THE AY 2006-07 ALLOWED THE CLAIM OF THE ASSESSE E. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A) IN THESE TWO ASSESSMENT YEARS. AT THE OUTSET, THE LD. DR POINTED OUT THAT THE AO DISALLOWED THE CLAIM FO R DEDUCTION U/S 80IB(10) OF THE ACT ON THE BASIS OF AREA OF THE EACH FLAT MENTI ONED IN THE COLLABORATION AGREEMENT WITH THE AFORESAID SOCIETY WHILE THE LD. CIT(A) MERELY RELIED UPON THE AUDITORS REPORT AND CONCLUDED THAT BUILT UP AREA O F EACH OF THE RESIDENTIAL UNIT WAS 998.35 SQUARE FEET. WHILE INVITING OUR ATTENTIO N TO PAGE 21&22 OF THE PAPER BOOK, THE LD. DR POINTED OUT THAT IF THICKNESS OF W ALLS IN THE RESIDENTIAL UNITS IS INCLUDED IN THE BUILT AREA, AREA OF EACH UNIT EXCEE DED 1000 SQ. FEET. SINCE NEITHER THE AO NOR THE LD. CIT(A) UNDERTOOK INDEPEN DENT VERIFICATION OF ACTUAL BUILT UP AREA OF EACH OF THE RESIDENTIAL UNITS , T HE LD. DR PLEADED THAT MATTER MAY BE RESTORED TO THE FILE OF THE AO FOR SUCH VERIFIC ATION. THE LD. AR ON BEHALF OF THE ASSESSEE DID NOT OBJECT TO SUCH VERIFICATION SUGGES TED BY THE LD. DR. . 5. WE HAVE HEARD FOR BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE. THE ONLY ISSUE BEFORE US RELATES TO MEASU REMENT OF ACTUAL BUILT UP AREA OF EACH OF THE 165 RESIDENTIAL UNIT IN THE AFORES AID HOUSING PROJECT. THE BUILT UP AREA AS DEFINED IN CLAUSE (A) OF SUB-SECTION (14) OF SECTION 80IB READS AS UNDER:- BUILT-UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDING THE PROJECTIONS AND BALC ONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS; ITA NO.3004/DEL./2009 & ITA NO.4199/DEL./2010 5 5.1 IN THE INSTANT CASE, THE AO DENIED THE CLAIM FOR DEDUCTION U/S 80IB(10) OF THE ACT WHILE REJECTING THE AUDITORS C ERTIFICATE, WITHOUT ANY INDEPENDENT VERIFICATION ON THE GROUND THAT THE BU ILT-UP AREA OF EACH OF THE RESIDENTIAL UNIT MENTIONED IN THE COLLABORATION AG REEMENT EXCEEDED 1000 SQ. FT WHILE THE LEARNED CIT(A) RELIED MERELY ON THE SAID AUDITORS CERTIFICATE AND ALLOWED THE CLAIM OF THE ASSESSEE INDISPUTABLY, NON E OF THE LOWER AUTHORITIES UNDERTOOK INDEPENDENT VERIFICATION OF ACTUAL BUILT UP AREA OF THE RESIDENTIAL UNIT IN THE SAID PROJECT, COMPRISING 165 RESIDENTIAL UNI TS. . IN THESE CIRCUMSTANCES, WHEN FACTS ARE IN DISPUTE, THE AO AND THE LEARNED C IT(A) HAVING NOT VERIFIED THE ACTUAL BUILT UP AREA AS DEFINED IN CLAUSE (A) OF S UB-SECTION (14) OF SECTION 80IB OF THE ACT, OF THE RESIDENTIAL UNITS COMPRISING TH E AFORESAID HOUSING PROJECT , WE FIND MERIT IN THE UNDISPUTED CONTENTIONS OF THE LD. DR AND ACCORDINGLY, CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FIND INGS OF THE LD.CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE D IRECTIONS TO VERIFY THE ACTUAL BUILT-UP AREA OF THE RESIDENTIAL UNITS, COMPRISING THE AFORESAID HOUSING PROJECT, THROUGH INDEPENDENT INQUIRIES OR OTHERWISE AND THER EAFTER, PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICI ENT OPPORTUNITY TO THE ASSESSEE. WITH THESE DIRECTIONS, GROUND NO.1 IN TH ESE APPEALS FOR THE AYS 2006-07 AND 2007-08 IS DISPOSED OFF. 6.. GROUND NO.3 IN THE APPEAL FOR THE AY 2007-08 B EING MERE PRAYER, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THESE TWO APPEALS, ALL THESE GROUNDS ARE DISMISSED. 7. NO OTHER SUBMISSION OR ARGUMENT WAS MADE BEFORE US. ITA NO.3004/DEL./2009 & ITA NO.4199/DEL./2010 6 8. IN RESULT, THESE APPEALS FOR THE AYS 2006-07 AND 2007-08 ARE ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (U.B. S. BEDI) (A.N. PAHU JA) JUDICIAL MEMBER ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO :- 1. M/S RAHEJA DEVELOPERS PVT. LTD.,, 215-216, D-4 , RECTANGLE ONE, DISTRICT CENTRE, SAKET, NEW DELHI(4199) 2. A.C.I.T.,CIRCLE-15(1),C.R. BUILDING, I.P. ESTATE , NEW DELHI. & ASSTT. CIT, CENT. CIRCLE-II, FARIDABAD. 3. CIT (APPEALS)-XVIII, NEW DELHI 4. THE CIT CONCERNED. 5. THE DR, ITAT,F BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DEL HI