ITO 15(3)(2), MUMBAI V. SAI SHRADDHA CONSTRUCTION, THANE

ITA 3049/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79093 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADGIRI
• Assessee Lawyers: S C TIWARI
• Keywords: Business income

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI .., ! , ' , # BEFORE SHRI I.P.BANSAL, JM AND SHRI RAJENDRA, AM ITA NO.3049/MUM/2012 : ASST.YEAR 2008-09 THE INCOME TAX OFFICER 15(3)(2), MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, GRANT ROAD (W) MUMBAI 400 007 M/S. SAI SHRADDHA CONSTRUCTION, 429, ARNEJA CORNER, SECTOR 17, VASHI, NAVI MUMBAI. PAN: ABDFS 2835F ( $% / // / APPELLANT) ' ' ' ' / VS. ( ()$%/ RESPONDENT) $% * + * + * + * + /APPELLANT BY : SHRI B.YADGIRI ()$% * + * + * + * + /RESPONDENT BY : SHRI S.C.TIWARI ' * ,-' / / / / DATE OF HEARING : 09.06.2014 ./0 * ,-' / DATE OF PRONOUNCEMENT : 09.06.2014 1 1 1 1 / / / / O R D E R PER I.P.BANSAL (JM) : THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-26, MUMBAI DATED 20/02/2012 F OR ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL RAISED BY THE REVE NUE READ AS UNDER: 01 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAS NOT V IOLATED THE PROVISION OF SECTION 8OLB(10) OF THE I.T. ACT IGNORING THE FACTS BROUGHT ON RECORDS THAT ON PHYSICAL INSPECTION THERE WERE MANY RESIDENTIAL UNITS IN THE BUILDING MEASURING MORE THAN 1000 SQ. FT. BUILT UP AREA WHICH IS IN CONTRAVENTIO N OF CONDITIONS LAID DOWN FOR DEDUCTION CLAIMED U/S 80 IB(10) OF THE I.T. ACT. 02 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE CHARGEABLE TERRACE OF 330 SQ. FT. SOLD WITH FLAT NO. 1403B HAVING CARPET AREA OF 900 SQ. FT. IS A COMMON TERRACE, WHEREAS THE FACT IS THAT THE CHARGEABLE TERRACE OF 330 SQ. FT. SOLD SOL ELY TO OWNER OF FLAT NO. 1403B WITH CARPET AREA OF 900 SQ. FT. IS NOT A COMMON TER RACE BUT A PRIVATE TERRACE AS INALIENABLE PART OF THE FLAT NO. 1403B TILL DATE . 03 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PROVISION FOR INFRASTRUCTURE IS AL LOWABLE DEDUCTION THOUGH SAME WAS NOT ASCERTAINED LIABILITY. ITA NO.3049/MUM/2012 : ASST.YEAR 2008-09 2 2. THIS APPEAL WAS EARLIER DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 29/5/2013 WHEN GROUND NO.1 & 2 WERE DECIDED IN FAVO UR OF THE ASSESSEE WHILE DISMISSING THE REVENUES APPEAL. SUBSEQUENT LY, A MISCELLANEOUS APPLICATION WAS FILED BY THE REVENUE CONTENDING TH AT ITAT DID NOT DECIDE GROUND NO.3. ACCEPTING THIS SUBMISSION OF THE REVE NUE THE TRIBUNAL VIDE ITS ORDER DATED 04/04/2014 PASSED IN MA NO.378/MUM/2013 HAS RECALLED ITS EARLIER ORDER DATED 29/05/2013 FOR THE LIMITED PU RPOSE OF ADJUDICATING GROUND NO.3. IT IS IN THIS MANNER THIS APPEAL WAS AGAIN POSTED FOR HEARING FOR ADJUDICATION OF GROUND NO.3. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVEL OPMENT OF INFRASTRUCTURE PROJECTS WHICH ARE ELIGIBLE FOR DEDUCTION UNDER SEC TION 80 IB(10) OF THE INCOME TAX ACT, 1961(THE ACT). DURING THE COURSE OF ASSES SMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS MADE A PROV ISION AS INFRASTRUCTURE FOR A SUM OF RS.85.00 LACS. ACCORDING TO AO SINCE NO EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR THE PROVISION AND AS AO FOUND T HAT THE ASSESSEE HAS COMPLETELY SOLD OUT ALL THE FLATS IN THE PROJECT AN D THE PROJECT WAS SHOWN AS COMPLETE, THEREFORE, HE OBSERVED THAT PROVISION FOR INFRASTRUCTURE OF 85.00 LACS AS ADHOC BUSINESS INCOME OF THE YEAR, HENCE, HE DI SALLOWED THE PROVISION. IT MAY ALSO BE MENTIONED HERE THAT AO HAS ALSO DISALLO WED THE CLAIM MADE BY THE ASSESSEE UNDER SECTION 80 IB(10) OF THE ACT ON THE GROUND THAT FOR A.Y.2007-08 THE ISSUE REGARDING GRANT OF DEDUCTION UNDER SECTIO N 80 IB(10) IS PENDING BEFORE ITAT. IT MAY ALSO BE MENTIONED HERE THAT THE ASSES SEE HAS BEEN HELD TO BE ENTITLED FOR DEDUCTION UNDER SECTION 80 IB(10) BY ITAT FOR ASSESSMENT YEAR 2005-06, 2006-07 AND 2007-08, WHEREBY ORDER OF LD . CIT(A) WAS CONFIRMED IN WHICH IT WAS HELD THAT ASSESSEE IS ENTITLED TO DE DUCTION UNDER SECTION 80 IB(10) OF THE ACT. REFERENCE IN THIS REGARD CAN BE MADE TO THE ORDER OF THE TRIBUNAL DATED 21/11/2012 PASSED IN ITA NO.2765/MUM/2009,5520/MUM/2009 AND 5521/MUM/2009 FO R ASSESSMENT YEAR 2005-06, 2006-07 AND 2007-08 RESPECTIVELY. 4. GROUND NO.1 & 2 RAISED BY THE REVENUE WERE IN RE LATION TO ALLOWABILITY OR OTHERWISE OF DEDUCTION UNDER SECTION 80 IB(10) AND TRIBUNAL WHILE DECIDING THIS GROUNDS HAS REFERRED TO THE EARLIER DECISION O F THE TRIBUNAL ON 21/11/2012 ITA NO.3049/MUM/2012 : ASST.YEAR 2008-09 3 IN RESPECT OF EARLIER YEARS AND FOLLOWING THE SAME IT HAS BEEN HELD THAT ASSESSEE IS ENTITLED TO GET DEDUCTION UNDER SECTION 80 IB(1 0) OF THE ACT. THEREFORE, ASSESSEE HAS ALREADY BEEN HELD TO BE ENTITLED FOR D EDUCTION UNDER SECTION 80 IB(10) OF THE ACT ON THE PROJECT IN RESPECT OF WHIC H THE PROVISION OF RS.85.00 LACS HAS BEEN MADE BY THE ASSESSEE. 5. WHILE AGITATING THE ADDITION OF RS.85.00 LACS B EFORE LD.CIT(A) IT WAS CONTENDED THAT AS PER TERMS OF ALLOTMENT OF FLATS T O THE MEMBERS, THE ASSESSEE HAD PROMISED THAT IT WOULD PROVIDE LANDSCAPED GARDE N, SWIMMING POOL, CLUBHOUSE ETC. BUT TECHNICAL REASONS, THESE AMENIT IES COULD NOT BE PROVIDED. ACCORDINGLY, THE PROVISION OF RS.85.00 LACS WAS MAD E WHICH IS PARTLY USED IN SUBSEQUENT YEARS. IT WAS ALSO CONTENDED THAT EVEN IF SUCH ADDITION IS MADE AND INCOME IS ENHANCED TO THAT EXTENT, THE ASSESSEE WILL BE ENTITLED FOR DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT EVEN ON SUCH ENHANCED INCOME. 6. CONSIDERING AFOREMENTIONED SUBMISSIONS LD. CIT(A ) RECORDED A FINDING THAT THERE IS NO MERIT IN THE ADDITION OF RS.80.00 LACS AS ONCE THE PROJECT IS COMPLETE AND ASSESSEE HAS BOOKED THE ENTIRE RECEIPT S, THEN IT HAS TO CLAIME THAT EXPENDITURE WHICH IS ALSO LIABLE TO BE MADE A S PER AGREEMENT OF SALE OF FLATS SUBJECT TO THE CONDITION THAT SUCH EXPENDITU RE SHOULD BE THE ASCERTAINED LIABILITY. LD. CIT(A) HAS FURTHER OBSERVED THAT IT IS NOT THE CASE OF THE AO THAT IN ANY DISCREPANCY IS THERE IN THE QUANTUM OF SUCH EX PENDITURE OR THE SAME IS EXAGGERATED. UNDER THE CIRCUMSTANCES, THE CLAIM O F THE ASSESSEE SHOULD HAVE BEEN ALLOWED BECAUSE THE SAME WHEN INCURRED IN LAT ER YEARS CANNOT BE ADJUSTED IN SUBSEQUENT YEARS AS THERE WOULD BE NO I NCOME FROM THE PROJECT IN SUBSEQUENT YEARS. LD. CIT(A) HAS FURTHER FOUND THA T OTHERWISE ALSO THE ASSESSEE IS ENTITLED FOR 100% DEDUCTION UNDER SECT ION 80 IB(10). EVEN IF INCOME IS ENHANCED BY THAT AMOUNT, THE ASSESSEE WOU LD BE ENTITLED FOR DEDUCTION OF ENHANCED INCOME WHICH WILL NULLIFY TH E ADDITION. THEREFORE, LD. CIT(A) HAS DELETED THE ADDITION. THE REVENUE IS AGGRIEVED, HENCE, HAS FILED AFOREMENTIONED GROUNDS. 7. AFTER NARRATING THE FACTS, RELYING UPON THE ADDI TION MADE IN THE ASSESSMENT ORDER IT WAS PLEADED BY LD. DR THAT ADDI TION WAS MADE RIGHTLY BY ITA NO.3049/MUM/2012 : ASST.YEAR 2008-09 4 THE AO AND IT HAS WRONGLY BEEN DELETED BY LD. CIT(A ). IT WAS PLEADED BY LD. DR THAT THE ORDER OF LD. CIT(A) ON THIS ISSUE SHOULD B E SET ASIDE AND THAT OF AO BE RESTORED. 8. ON THE OTHER HAND, RELYING UPON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE LD. CIT(A) AND FINDINGS RECORDED BY HIM IT W AS PLEADED BY LD. AR THAT RELIEF HAS RIGHTLY BEEN GRANTED BY LD. CIT(A) AND HIS ORDER SHOULD BE UPHELD. HE FURTHER SUBMITTED THAT IN SUBSEQUENT YEAR THE AS SESSEE HAS MADE EXPENDITURE AGAINST THE PROVISION AND BALANCE UNSPE NT AMOUNT HAS BEEN OFFERED AS INCOME. HE SUBMITTED BEFORE US FOLLOW ING DETAILS, COPY OF WHICH WAS ALSO GIVEN TO LD. DR. PROVISION FOR CLUB HOUSE /SWIMMING POOL. F.Y. 2007-08 RS. 85,00,000 F.Y.2008-09 EXP. RS. 39,01,627 RS. 45,98,373 F.Y.2009-10 EXP. RS.9,12,109 RS. 37,33,051 F.Y. 2010-2011 EXP. RS.14,850 RS. 36,71,414 F.Y.2011-2012 INCOME OFFERED RS.36,71,414 RS. NIL THUS, IT WAS SUBMITTED BY LD. AR THAT LD. CIT(A) H AS RIGHTLY DELETED THE ADDITION. 9. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY CONSIDERED. LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT ENTIRE RECEIPTS FROM THE PROJECT WERE OFFERED TO INCOME TA X BY THE ASSESSEE AND THERE BEING CERTAIN OBLIGATION FOR WHICH THE AMOUNT WAS REQUIRED TO BE SPENT AND FOR THAT AMOUNT A PROVISION WAS MADE. THE SECOND CONTE NTION WAS THAT WHEN ENTIRE RECEIPTS ARE EXEMPTED UNDER SECTION 80 IB(10 ) THEN EVEN IF INCOME IS ENHANCED BY THE AMOUNT OF THE PROVISION THEN ALSO T HE ASSESSEE WILL BE ENTITLED FOR FULL DEDUCTION AND NO RESULTANT INCOME WILL BE ASSESSABLE. WE HAVE ALREADY NOTICED THAT ASSESSEE HAS ALREADY BEEN GRANTED DEDU CTION UNDER SECTION 80 IB(10) WHICH IS AVAILABLE @ 100%. THEREFORE, THERE IS A FORCE IN THE FINDINGS RECORDED BY LD. CIT(A) THAT ADDITION WILL BE TAX NE UTRAL. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN DELETING THE ADDITION A ND WE DECLINE TO INTERFERE IN ITA NO.3049/MUM/2012 : ASST.YEAR 2008-09 5 THE RELIEF GRANTED BY LD. CIT(A) DE-HORSE THE FACT THAT SOME PART OF THE AMOUNT WAS EXPENDED BY THE ASSESSEE IN SUBSEQUENT YEARS AN D UN-SPENT AMOUNT OF RS.36,71,414/- WAS OFFERED TO TAX IN FINANCIAL YEAR 2011-12. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 10. KEEPING IN VIEW THE EARLIER DISPOSAL OF GROUND NO.1 & 2 OF THE PRESENT APPEAL VIDE EARLIER ORDER DATED 29/5/2013 THE APPE AL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH JUNE, 2014 . 1 * ./0 2'3 09/06/2014 / * : SD/- SD/- (RAJENDRA) (I.P.BANSAL) ' ' ' ' / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2' DATED : 9 TH JUNE, 2014. VM. 1 * (,; < ;0, 1 * (,; < ;0, 1 * (,; < ;0, 1 * (,; < ;0,/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. ()$% / THE RESPONDENT. 3. =() / THE CIT, MUMBAI. 4. = / CIT(A)-13, MUMBAI 5. ;@: (,' , , / DR, ITAT, MUMBAI 6. :A B / GUARD FILE. 1' 1' 1' 1' / BY ORDER, );, (, //TRUE COPY// C CC C/ // /D D D D (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI