VIJAY NAGAR CORPORION, MUMBAI V. DCIT CC-10, MUMBAI

ITA 3174/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56179 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Keywords: Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.3174/MUM/2009 (ASSESSMENT YEAR: 2004-05) VIJAY NAGAR CORPORATION, REHMAN BLDG., 2ND FLOOR, 24, VEER NARIMAN ROAD, FORT, MUMBAI -400 001 ...... APPELLANT VS ACIT CENT. CIR. 10, 10TH FLOOR, OLD CGO ANNEXE, M.K. ROAD, MUMBAI -400 020 ..... RESPONDENT PAN: AAAFV 5936 C APPELLANT BY: SHRI PRAKASH JOTWANI RESPONDENT BY: SHRI SUBACHAN RAM DATE OF HEARING: 07.12.2011 DATE OF PRONOUNCEMENT: 23.12.2011 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT MUMBAI PASSED U/S.263 OF THE I.T. AC T DATED 26.03.2009 FOR THE A.Y. 2004-05. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW:- 1. THE LEARNED CIT ERRED IN PASSING AN ORDER U/S.26 3 BY HOLDING THE ASSESSMENT MADE U/S.144 R.W.S. 153A WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT U/S.80IB(10) COMMERCIAL CONSTRUCTION IS NOT A PART OF HOUSING PROJECT PRIOR TO ITA 3174/MUM/2009 VIJAY NAGAR CORPORATION 2 1.4.2005 AND HENCE DEDUCTION U/S.80IB(10) ON A RESIDENTIAL CUM COMMERCIAL PROJECT WAS NOT JUSTIFIE D. 2. THE LEARNED CIT ERRED IN APPLYING THE DECISION O F MUMBAI TRIBUNAL IN CASE OF LAUKIK DEVELOPERS WHICH HAS BEEN OVERRULED BY PUNE SP. BENCH IN THE CASE OF BRAHMA ASSOCIATES. FURTHER THE LEARNED CIT ERRED IN HOLDING THAT THE AO HAD NOT APPLIED HIS MIND, FAILE D TO MAKE ENQUIRIES AND NOT EXAMINED THE CLAIM IN DETAIL . 2. THE FACTS PERTAINING TO THE CONTROVERSY BEFORE U S ARE AS UNDER. IN THIS CASE, THERE WAS SEARCH AND SEIZURE ACTION U /S.132 OF THE I.T. ACT AGAINST THE ASSESSEE ON 02.12.2004. IN CONSEQU ENCE OF SEARCH & SEIZURE ACTION, THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S.143(3) R.W.S. 153A OF THE ACT. THE ASSESSEE CL AIMED THE DEDUCTION U/S.80IB(10) IN RESPECT OF THE ASSESSEES HOUSING P ROJECT AT YOGI NAGA (PHASE-II). AS NOTED BY THE A.O. IN THE ASSESSME NT ORDER THE ISSUE OF THE ELIGIBILITY OF DEDUCTION U/S.80IB(10) OF THE AC T WAS REFERRED TO THE ASSTT. VALUATION OFFICER (AVO) FOR INSPECTION REPOR T AND THE AVO FURNISHED THE REPORT DATED 25.02.2005. THE A.O. AL SO EXAMINED THE ISSUE AND AFTER BEING SATISFIED THAT ALL THE CONDIT IONS ARE FULFILLED AND THEN ALLOWED THE CLAIM OF THE ASSESSEE U/S.80IB(10) OF THE ACT IN RESPECT OF YOGI-NAGAR-PROJECT (PHASE-II). SUBSEQ UENTLY, THE LD. CIT INVOKED SEC.263 OF THE ACT, AS IN HIS OPINION, THE ASSESSMENT ORDER PASSED BY THE A.O. WAS ERRONEOUS AS WELL AS TO THE EXTEND PRE-JUDICIAL TO THE INTEREST OF THE REVENUE ON THE FOLLOWING REA SONS:- (I) THAT VERIFICATION OF THE DETAILS AVAILABLE ON R ECORD REVEALED THAT 4135 SQ.FT. OF THE CONSTRUCTED AREA WAS COMMER CIAL, AS THE PROJECT WAS COMPLETED IN THE A.Y. 2004-05, N O COMMERCIAL CONSTRUCTION WAS PERMISSIBLE IN A HOUSIN G PROJECT; ITA 3174/MUM/2009 VIJAY NAGAR CORPORATION 3 (II) PROVISION OF COMMERCIAL CONSTRUCTION WITHIN A HOUSING PROJECT WERE INTRODUCED W.E.F. 1.4.2005 AND MAXIMUM PERMISSIBLE LIMIT FOR THE SAID COMMERCIAL CONSTRUCT ION IS 2000 SQ.FT. EVEN UNDER SAID PROVISION, THE COMMERC IAL AREA IN THE ASSESSEES PROJECT EXCEEDED PRESCRIBED LIMIT OF 2000 SQ.FT. THE LD. CIT WAS OF THE OPINION THAT AS PER LAW PRIO R TO 1.4.2005 THERE IS NO SCOPE FOR COMMERCIAL CONSTRUCTION IN THE HOUS ING PROJECT AND THAT ASPECT WAS NOT EXAMINED BY THE A.O. THE LD. C IT CANCELLED THE ASSESSMENT ORDER AND DIRECTED THE A.O. TO MAKE THE FRESH ASSESSMENT; 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE LD. COUNSEL ARGUES THAT THE ISSUE ON MERIT IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. M/S. BRAHMA ASSOCIATES 333 ITR 289 (BOM). HE FURTHER SUBMITS THAT IN THE OTHER GROUP COMPANIES O N THE IDENTICAL REASONING, THE LD. CIT DIRECTED TO WITHDRAW THE DED UCTION U/S.80IB(10), BUT, WHEN THE MATTER REACHED BEFORE T HE TRIBUNAL, IN THE SAID CASE, THE ORDER PASSED BY THE LD. CIT U/S. 263 WAS QUASHED. THE LD. COUNSEL HAS FILED COPY OF THE ORDER OF THE TRIBUNAL WHICH IS PLACED ON RECORD. WE HAVE ALSO HEARD THE LD. D.R. 4. WE FIND THAT ON MERIT, THE ISSUE OF THE ALLOWABI LITY OF THE HOUSING PROJECT HAVING COMMERCIAL SHOPPING HAS BEEN EXAMINED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BRAHMA ASSOCIATES 333 ITR 289 AND HONBLE HIGH COURT HELD THAT THE CLAUSE (D) TO SECTION 80IB(10) W.E.F. 1.4.2005 IS APPLICAB LE PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE, COULD NOT BE APPLIED F OR THE PERIOD PRIOR TO 1.4.2005. IT IS FURTHER HELD THAT SUBJECT TO TH E FULFILLING THE OTHER CONDITIONS, UPTO 31 ST MARCH, 2005, DEDUCTION U/S.80IB(10) IS ALLOWABLE TO THE HOUSING PROJECT APPROVED BY THE LO CAL AUTHORITY HAVING RESIDENTIAL HOUSE WITH COMMERCIAL USER TO TH E EXTENT PERMITTED UNDER THE DEVELOPMENT CONTROL RULES/REGULATIONS FRA MED BY THE ITA 3174/MUM/2009 VIJAY NAGAR CORPORATION 4 RESPECTIVE LOCAL AUTHORITY. IT IS FURTHER HELD THAT PRIOR TO 31.3.2005 WITHOUT ANY PROVISION UNDER THE INCOME-TAX ACT, THE SPL. BENCH OF THE ITAT IN THE CASE OF BRAHMA ASSOCIATES VS. JT. CIT 1 19 ITD 255 (PUNE)(SB) WAS NOT JUSTIFIED IN HOLDING THAT UP TO 31.3.2005 DEDUCTION U/S.80IB(10) WOULD BE ALLOWABLE TO PROJECT APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCI AL AREA UP TO 10% OF THE TOTAL PERMISSIBLE BUILT-UP AREA OF THE PLOT. 5. IN OUR OPINION, THE ASSESSMENT ORDER PASSED BY T HE A.O. CANNOT BE SAID TO BE ERRONEOUS AS THE VIEW TAKEN BY THE A. O. IS IN CONFORMITY AS PER THE PRINCIPLES LAID DOWN BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA). IT IS WELL SETTLED PRINCIPLES OF LAW THAT FOR EXERCISING JURISDICTION U/S.263 BOTH THE CONDITIONS MUST BE SATISFIED (I) ORDER MUST BE ERRO NEOUS; AND (II) IT SHOULD ALSO BE PRE-JUDICIAL TO THE INTEREST OF THE REVENUE. [MALABAR INDUSTRIAL CO.- 243 ITR 83 (SC). IN PRESENT CASE AS ONE OF THE CONDITIONS IS NOT FULFILLED, WE HAVE NO OPTION BUT TO QUASH THE ORDER OF LD. CIT PASSED U/S.263. WE, ACCORDINGLY, DO SO. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 3RD DECEMBER, 2011. SD/- SD/- ( RAJENDRA SINGH ) ACCOUTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 23RD DECEMBER, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT CENTRAL-I, MUMBAI. 4) THE ADDL. CIT-2 CONCERNED , MUMBAI. 5) THE D.R. F BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 3174/MUM/2009 VIJAY NAGAR CORPORATION 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 07.12.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 07.12.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER