DCIT CEN CIR 1, MUMBAI V. FRIENDS DEVELOPMETNS CORP, MUMBAI

ITA 3203/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7809 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 23-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N JAYENDRAN
• Keywords: Search and seizure
• Section: 143(3)

Judgement Text

I.T.A NO.3203/ MUM/2010 FRIENDS DEVELOPMENTS CORPN 1 IN THE INCOME TAX APPELLATE TRIBUNAL, F BENCH, MUMBAI. BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.3203/ MUM/2010 ASSESSMENT YEAR: 2004-05 DCIT, CENT. CIRCLE 1, .. APPELLANT OLD CGO BUILDING, ANNEXE, M.K.ROAD, MUMBAI. VS FRIENDS DEVELOPMENTS CORPN. ,. RESPONDEN T 276, 1 ST FLOOR, LAWRENCE & MAYO HOUSE, DR. D.N.ROAD, FORT, MUMBAI. PA NO.AAAFF 6672 M APPEARANCES: ASHIMA GUPTA, FOR THE APPELLANT N. JAYENDRAN, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS C ALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 26 TH FEBRUARY, 2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, F OR THE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT (A) ERRED IN HOLDING THAT THE DEDUCTION U/S.80IB(10) OF THE AC T, AS APPLICABLE PRIOR TO 1 ST APRIL, 2005, IS ADMISSIBLE IN CASE OF A HOUSING PROJECT COMPRISING RESIDENTIAL HOUSING UNITS AND COMMERCIAL ESTABLISHMENTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD CIT (A) ERRED IN HOLDING THAT THE RESIDENTIAL PROJECTS, HAVING COMMERC IAL AREA UPTO 10% OF THE I.T.A NO.3203/ MUM/2010 FRIENDS DEVELOPMENTS CORPN 2 PROJECT, IS ELIGIBLE FOR THE CLAIM OF DEDUCTION FOR ENTIRE PROJECT U/S.80IB(10) OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD CIT (A) ERRED IN HOLDING THAT THE LIMIT ON COMMERCIAL USE OF BUILT UP AREA AS PRESCRIBED BY CLAUSE (A) OF SECTION 80 IB(10) OF THE ACT HAS NO RETR OSPECTIVE APPLICATION, AND IT APPLIES ONLY W.E.F. THE ASSESSMENT YEAR 2. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIK E THIS. A SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT WAS CARRIED OUT ON SHRI DE EPAK GORADIA AND HIS GROUP CONCERNS KNOWN AS DOSTI GROUP ON 12.9.2006. DURING T HE COURSE OF SEARCH, SOME DOCUMENTS WERE FOUND AND SEIZED. IN RESPONSE TO NOTICE UNDER SECTION 153C, THE ASSESSEE FILED THE RETURN OF INCOME ON 13.9.2007 DECLAR ING TOTAL INCOME AT ` . NIL. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, NOTICED THAT THE ASSESSEE HAS SOLD FEW OF THE FLATS OUT OF ITS CLOSING STOCK OF ITS PROJECT MAITRI GARDEN AT THANE, COMPLETED IN THE IMMEDIATELY PRECEDING YE AR AND CLAIMED DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF PROFITS FROM THE AFORESAID PROJECT IN A.Y. 2003- 04. IT WAS ALSO NOTED BY THE AO THAT IN THIS YEAR, T HE ASSESSEE HAS ALSO CLAIMED DEDUCTION OF 100% OF PROFIT FROM THE SAID PROJECT. IT WAS IN THIS BACKDROP, THE AO , IN THE LIGHT OF PRINCIPLES LAID DOWN BY THE ITAT MUM BAI IN THE CASE OF LAUKIK DEVELOPERS V DCIT, IN TIA NO.532/M/06, ASKED THE ASSESSE E TO JUSTIFY ITS CLAIM OF DEDUCTION UNDER SECTION 80IB. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE DID NOT FULFILL THE PRECONDITION FOR CLAIMING EXEMPTION THAT THE PROJE CT SHOULD BE HOUSING PROJECT AND, THEREFORE, THE CLAIM OF DEDUCTION U/S.80IB WAS R EJECTED. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A ). 3. BEFORE THE CIT (A), THE ASSESSEE HAS FILED A LETTER DATED 20 TH FEBRUARY, 2010 ENCLOSING LETTER FROM MUNCIPAL CORPORATION OF CITY O F THANE NO.TMC/SVK/5091 DATED 13.1.2010 ADDRESSED TO THE ASSESSEE, CONFIRMING TH E PROJECT IS PART OF RESIDENTIAL PROJECT. ON THE BASIS OF THIS LETTER, THE CIT (A) WAS OF THE VIEW THAT THERE IS NO DOUBT THAT THE BUILDINGS ARE FORMING PART OF HO USING PROJECT WHICH HAS BEEN DEVELOPED AND CONSTRUCTED IN ACCORDANCE WITH THE PLA N AS APPROVED BY THE MUNCIPAL AUTHORITY. IT WAS ALSO NOTED BY THE CIT(A) THAT THE TOTAL BUILT UP AREA OF THE PROJECT IS 1,16,106 SQ. FT OUT OF WHICH THE RESIDENTIA L DWELLING UNITS COVER 1,08,378 I.T.A NO.3203/ MUM/2010 FRIENDS DEVELOPMENTS CORPN 3 SQ.FT LEAVING THE COMMERCIAL USAGE ARA OF 7,728 SQ. FT . ACCORDINGLY, FOLLOWING THE DECISION DATED 6.4.2009 OF THE ITAT PUNE, (SB) IN T HE CASE OF BRAHMA ASSOCIATES V CIT, IN ITA NO.1417/PN/06, DIRECTED THE AO TO ALLOW DEDUCTION U/S.80IB(10). AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 7. LEARNED REPRESENTATIVES AGREE THAT THE VIEW TAKEN BY THE SPECIAL BENCH IN THE CASE OF BRAHMA ASSOCIATES V JCIT(111 ITD 113) WHICH HAS BEEN FOLLOWED BY THE CIT (A) IN THE IMPUGNED ORDER, HAS SINCE BEEN CONFIRMED B Y THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES, 51 DTR 298 (BOM). IT HAS BEEN HELD BY THEIR LORDSHIPS THAT SECTION 80 IB(10) IS TO BE ALLO WED IN ENTIRETY TO THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESID ENTIAL UNITS WITH COMMERCIAL USER. THE DEDUCTION ALLOWED TO THE ASSESSEE IS IN CO NFORMITY WITH THE LAW LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF BRAHMA ASSOCI ATES (SUPRA). THEREFORE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE. 8. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH, 2011 SD/- (N.V.VASUDEVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 29 TH MARCH, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),36, MUMBAI 4. COMMISSIONER OF INCOME TAX, CENT.-1 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH F, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI I.T.A NO.3203/ MUM/2010 FRIENDS DEVELOPMENTS CORPN 4