DCIT Cir -1(1), Pune V. Apoorva Properties and Estates P Ltd, Pune

ITA 328/PUN/2012

• Counselvise Citation: 32824514 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA RAI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.328/PN/2012 (ASSTT. YEAR : 2007-08) DCIT, CIRCLE-1(1), PUNE. .. APPELLANT VS. APOORVA PROPERTIES AND ESTATES P. LTD., 2413, KUMAR CAPITAL, EAST STREET, 1 ST FLOOR, CAMP, PUNE 411001. .. RESPONDENT PAN: AABCA5787C ASSESSEE BY : SHRI RAJENDRA AGIWAL DEPARTMENT BY : SMT.SUNITA RAI DATE OF HEARING : 01.05.2013 DATE OF PRONOUNCEMENT : 09.05.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN ALLOWI NG THE CLAIM U/S 80IB(10) OF THE ACT TO THE ASSESSEE IN SP ITE OF THE FACT THAT THE INITIAL LAYOUT PLAN SANCTIONED WAS FO R BOTH PHASE-I & PHASE-II TOGETHER, ON 07.07.1993 I.E. MUC H BEFORE 01.10.1998 ; THE DATE ON WHICH THE PROVISION OF 80IB(10) WERE INCLUDED IN THE STATUTE. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN ALLOWI NG THE ASSESSEE'S CLAIM U/S 80IB(10) , IN SPITE OF THE FAC T THAT THE ASSESSEE COMPANY HAD TREATED BOTH PHASE-L & PHASE-I I OF KUMAR KARISHMA PROJECT AS ONE SINGLE PROJECT FOR TH E PURPOSE OF CONSTRUCTING ADDITIONAL AREA IN SO CALLED PHASE -II IN THE STRENGTH OF TDR RIGHTS CALCULATED ON THE COMBINED A REA OF BOTH PHASE-I AND PHASE-II TOGETHER AND USED IN PHAS E-II ALONE. 2 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN ALLOWI NG THE ASSESSEE'S CLAIM U/S 80IB(10) OF THE ACT IN SPITE O F THE FACT THAT THERE IS NO SEPARATE PROVISION FOR AMENITIES S UCH AS SWIMMING POOL, CLUB HOUSE AND EVEN THE WATER SOURCE I.E. BORE WELL, WHICH ARE ALSO COMMON FOR ALL THE RESIDE NTS OF BUILDING IN PHASE-L & PHASE-LL. 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN ALLOWI NG THE ASSESSEE'S CLAIM U/S 80IB(10) OF THE ACT IN SPITE O F THE FACT THAT THE ASSESSEE COMPANY HAS VIOLATED THE PROVISIO NS AND THE CONDITIONS THERETO PROVIDED UNDER THE SCHEME OF SEC TION 80IB(10),WITH REGARDS TO THE LIMIT OF THE BUILT-UP AREA IN RESPECT OF MANY OF THE RESIDENTIAL UNITS WHICH HAS EXCEEDED 1500 SQ.FT. AS PROVIDED BY THE STATUTE. 5. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN ALLOWI NG THE ASSESSEE'S CLAIM U/S 80IB(10) OF THE ACT IN SPITE O F THE FACT THAT THE ASSESSEE COMPANY HAS VIOLATED THE PROVISIO NS IN VIEW OF THE FACT THAT THE COMMERCIAL AREA DEVELOPED BY I T, EXCEEDS THE NORMAL LIMIT OF 2000SQ.FT. OR 5% OF THE TOTAL B UILT UP AREA OF THE PROJECT, IN VIEW OF THE FACT THAT COMMERCIAL AREA DEVELOPED IS 12,249 SQ.FT. FOR BOTH THE PHASE-I & P HASE-II AND IT IS 2114 SQ.FT. DISTINCTLY IN THE PHASE-II OF THE PROJECT THERE BY VIOLATING THE PROVISIONS OF THE STATUTE. 6. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE, IN FAILING TO APPREC IATE THAT THE ITAT, SPECIAL BENCH, PUNE IN ITS DECISION IN THE CA SE OF BRAHMA ASSOCIATES FOR THE A.Y. 2003-04 HAD HELD BEY OND ANY CONFUSION THAT THE POSITION WITH EFFECT FROM ASSESS MENT YEAR 2005-06 WOULD BE DIFFERENT IN VIEW OF THE SPECIFIC RESTRICTION BROUGHT INTO EFFECT BY SECTION 80IB(10)(D) OF THE I NCOME-TAX ACT WHICH PROVIDES THAT THE COMMERCIAL USE OF BUILT UP AREA SHALL NOT EXCEED 2000 SQ.FT. OR 5% OF THE AGGREGATE BUILT UP AREA, WHICHEVER IS LESS. 7. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N THE FACTS AND CIRCUMSTANCES OF THE CASE, IN ALLOWING THE ASSE SSEE CLAIM ON THE BASIS OF THE DECISION OF HON'BLE HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES, WHERE THE REVENUE HAS ALREADY FILED SLP BEFORE THE HON'BLE SUPREME COURT THE DECISION O N WHICH IS STILL PENDING. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O ALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) BY THE CIT(A) IN RE SPECT OF ASSESSEES PROJECT NAMED KUMAR KARISHMA. AT THE O UTSET OF HEARING, THE LD. AUTHORISED REPRESENTATIVE SUBMITTE D THAT IN ASSESSEES OWN CASE THE ITAT PUNE A BENCH IN ORDE R DATED 3 21.08.2009, HAS DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE, BY OBSERVING AS UNDER: 7. WE FIND THAT THE OBJECTIONS BASED ON WHICH THE IMPUGNED CLAIM OF DEDUCTION U/S.80-IB(10) IS REJECTED HAVE B EEN CONSIDERED BY THE CO-ORDINATE BENCHES ON A FEW OCCA SIONS AS ALSO THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES VS. JOINT CIT (OSD) CIR.4, PUNE (2009) 1 19 ITD 255. AS REGARDS THE QUESTION OF COMMERCIAL USE OF BUILT UP AREA THE SPECIAL BENCH HAS OPINED THAT AS LONG AS IT DOES NO T EXCEED 10% OF THE TOTAL BUILT UP AREA, THE PROJECT WILL CO NTINUE TO HAVE THE CHARACTER OF HOUSING PROJECT AND ACCORDINGLY, T HE DEDUCTION U/S.80-IB(10) CANNOT BE DECLINED FOR THAT REASON ALONE. IN THE PRESENT CASE, THE COMMERCIAL BUILT UP AREA IS HARDLY LESS THAN 10%. AS REGARDS THE QUESTION ABOU T SIZE OF THE FLATS WE HAVE TAKEN NOTE OF THE FACTUAL POSITIO N THAT EVEN ACCORDING TO THE ASSESSING OFFICER NONE OF THE FLAT S IN PHASE II EXCEEDS THE SIZE OF 1500 SQ.FT. IN ANY EVENT IN TH E COURSE OF REMAND PROCEEDINGS, THE MATTER WAS EXAMINED BY THE ASSESSING OFFICER AGAIN. THE ASSESSING OFFICER IS NOT ABLE TO POINT OUT ANY SPECIFIC VIOLATION OF THE SAID PROVIS ION. LEARNED DEPARTMENTAL REPRESENTATIVE VERY FAIRLY ACCEPTED TH AT HE IS NOT IN A POSITION TO POINT OUT ANY SUCH INSTANCE. THAT LEAVES US A QUESTION AS TO WHETHER KUMAR KARISHMA IS TO BE TREA TED AS AN INTEGRAL AND INSEPARABLE PROJECT OR VARIOUS PROJECT S OF THIS PROJECT CAN BE CONSIDERED ON A STAND ALONE BASIS. ONE OF THE MAJOR ARGUMENTS IN SUPPORT OF THE ENTIRE PROJECT BE ING TREATED AS ONE PROJECT IS COMMON FACILITIES USED BY THE FLA T OWNERS BUT THEN WE ARE UNABLE TO APPRECIATE AS TO HOW MERE FAC T OF FACILITIES BEING COMMON CAN BE USED AGAINST THE ASS ESSEES CLAIM OF SEPARATE PROJECT. IT IS VERY WELL POSSIBL E THAT THE AMENITIES OF ONE PROJECT CAN BE USED BY RESIDENTS O F THE OTHER PROJECT AND THAT ALONE CANNOT ALTER THE CHARACTER O F INDEPENDENT PROJECT. AS WE MENTIONED EARLIER, THER E ARE NUMBER OF DECISIONS OF CO-ORDINATE BENCHES INCLUDIN G SAROJ SALES ORGANIZATION VS. ITO (2008) 115 TTJ (BOM) 485 AND CIT VS. BRIGADE ENTERPRISES (2008) 119 TTJ (BANG) 269 W HEREIN IT IS HELD THAT AS LONG AS DIFFERENT BLOCKS CAN SATISF Y THE REQUIREMENT OF SECTION 80-IB(10) ON A STAND ALONE B ASIS, THEIR CLAIM CANNOT BE REJECTED MERELY ON THE GROUND THAT THEY ARE PART OF LARGER LAY OUT. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE HAS CONSTRUCTED DIFFERENT BLOCKS OF RESIDENTIAL BUILDINGS AND HE HAS NOT CLAIMED DEDUCT ION U/S.80-IB(10) IN RESPECT OF BUILDING WHICH WAS NOT ELIGIBLE FOR THE SAME. IT IS ALSO NOT DISPUTED THAT SEPARATE SA NCTIONS WERE GRANTED BY THE PUNE MUNICIPAL CORPORATION FOR THE P HASE II OF THE PROJECT AND THAT IT SATISFIES THE CONDITIONS OF SECTION 80-IB(10) ON A STAND ALONE BASIS. AS HAS BEEN HELD BY THE CO-ORDINATE BENCHES THE CONCEPT OF HOUSING PROJECT DOES NOT MEAN THAT THERE SHOULD BE A GROUP OF BUILDINGS AND ONLY THEN THE SAME CAN BE COLLECTIVELY CALLED AS A HOUSING PR OJECT. IN THE 4 CASE OF SAROJ SALES ORGANISATION (SUPRA), WHILE DEA LING WITH THIS CONTENTION, THE CO-ORDINATE BENCH HAS OBSERVED AS FOLLOWS: THE COMMENCEMENT CERTIFICATES IN RESPECT OF BUILDI NG NO.I CONSISTING OF WINGS A AND B WERE RECEIVED BY C APL ON 7TH MARCH, 2001 AND 30TH MARCH, 2001 RESPECTIVEL Y. BUT THE COMMENCEMENT CERTIFICATES FOR VARIOUS WINGS IN BLOCK 'N' WERE APPROVED BY THE MUNICIPALITY ON VARIOUS DATES BETWEEN 10 TH SEPT., 2001 TO 23 RD SEPT., 2003, ALL THE SIX WINGS ARE PART OF 'N' BLOCK AND INDEPENDENTLY SATISFIES THE NECESSARY APPROVAL OF A HOUSING PROJECT. IT REALLY MAKES NO DIFFERENCE WHETH ER CAPL HAD APPLIED FOR OR THE ASSESSEE HAD APPLIED TO THE MUNICIPAL CORPORATION TO MAKE ANY DIFFERENCE IN DEC IDING THE ASSESSEES CLAIM FOR DEDUCTION UNDER S. 80-IB(1 0). IT MUST BE APPRECIATED THAT THE MAIN DEVELOPER WAX CAP L. THE SANCTION PLAN HAVE ONLY APPROVED THE CONSTRUCTION OF THE DWELLING UNITS OF LESS THAN 100 0 SQ.FT. IN ALL THE WINGS OF THE SAID PROJECT. THERE I S NO DISPUTE THAT TILL THE FLATS IN THE WINGS IN BLOCK 'N' CONTAIN THE ELIGIBLE UNITS. IT IS NOT OPEN TO THE REVENUE T O INCLUDE THE NEXT PROJECT 'BC' BLOCK AS PART OF THE EARLIER HOUSING PROJECT JUST TO DENY THE STATUTORY RELIEF, W HICH THE ASSESSEE IS ENTITLED IN RESPECT OF THE ELIGIBLE HOUSING PROJECT. IN THAT WAY THE LEGISLATIVE INTENTION TO GI VE RELIEF TO THE ASSESSEE WHO IS UNDERTAKING THE LAW HOUSING PROJECTS WILL GET DEFEATED. 'BC' PROJECT WAS MEANT FOR HIGHER STRATA OF THE SOCIETY. THE ASSESSES HAS SEGR EGATED THE SAME AND IN NO WAY MIXED IN THESE PROJECTS EITHE R IN THE DESIGN OR IN THE STRUCTURAL MANIPULATION OR IN THE PROVISION OF AMENITIES AND THE ASSESSEE HAS NOT CLA IMED ANY RELIEF IN RESPECT OF PROJECT WHICH ADMITTEDLY DO ES NOT ADMIT THE LEST LAID DOWN UNDER S . 80-IB(10) . COMBINING THESE TWO PROJECTS INTO ONE WILL LEAD TO A RESULT, W HICH MANIFESTLY WILL BE UNJUST AND ABSURD AND DEFEAT THE VERY PROVISIONS OF DEDUCTION SECTIONS. UNLESS THERE IS A CLEAR INTENTION OF THE LEGISLATOR THE REVENUE CANNOT BE PERMITTED TO DO SO. AFTER ALL THE ASSESSEE HAS OBTA INED DIFFERENT COMMENCEMENT CERTIFICATES AND STARTED ON DIFFERENT PERIODS OF TIME. THEY ARE SEPARATE BY TIM E, SPACE AND STATUTORY APPROVALS AND EVEN IN DESIGNS, MAINTENANCE OF SEPARATE BOOKS OF ACCOUNT. THE REVEN UE IS NOT RIGHT IN TREATING BOTH THE PROJECTS AS ONE AN D INTEGRATED WITHOUT THE FACTS WARRANTING FOR SUCH CONCLUSION. OBJECTION OF THE AO THAT AS THE PERMIS SIBLE SHOPPING AREA OF HOUSING PROJECT EXCEEDS 5 PER CENT, THE ASSESSEE IS NOT ENTITLED FOR RELIEF UNDER S. 80-IB( 10) IS NOT SUSTAINABLE. THE HOUSING PROJECTS WERE APPROVED BEFO RE 3LST MARCH, 2005 AND FOR SUCH PROJECT, WHICH WERE S O APPROVED, THERE WAS NO STIPULATION AS TO THE SHOPPI NG COMPLEX AREA IS PERMISSIBLE IN THE PROJECT. THE 5 AMENDMENTS WERE SUBSEQUENTLY MADE WHILE EXTENDING THE DEDUCTION OF INCOME FRONT HOUSING PROJECT APPRO VED UPTO 31 ST MARCH, 2007, AND THE DENIAL OF DEDUCTION IS CLEARLY NOT IN ACCORDANCE WITH LAW. AS THE OCCUPATI ON CERTIFICATE IN RESPECT OF THE WINGS F, FL AND G HAV E BEEN ISSUED ON 20 TH DEC., 2006, I.E. PRIOR TO 31 ST MARCH, 2008, THE CONDITION RELATING TO COMPLETION OF THE CONSTRU CTION AX PRESCRIBED IN S. 80-IB(1O)(A) SHOULD ALSO BE TAK EN TO BE SATISFIED.-BENGAL AMBUJA HOUSING DEVELOPMENT LTD . VS. DY. CIT (ITA NOS.1594 AND 1737/KOL/2005 DTD. 24 TH APRIL, 2006) RELIED ON. ASSESSEE HAVING COMPLETED THE CONSTRUCTION OF VARIO US WINGS OF THE BUILDING UNDER THE APPROVED PLAN IN TW O DIFFERENT BLOCKS UNDER DIFFERENT CERTIFICATES OF COMMENCEMENT, WAS ELIGIBLE FOR DEDUCTION U/S 80-IB(1O) IN RESPECT OF ONE BLOCK IN RESPECT OF WHI CH CLAIM FOR DEDUCTION WAS MADE AND WHICH SATISFIED TH E REQUIREMENT OF SEC. 80-IB(10); CLAIM COULD NOT BE DENIED BY CLUBBING THE TWO BLOCKS ESPECIALLY WHEN T HE SECOND BLOCK HAD BEEN KEPT SEPARATE BY THE ASSESSEE AND FOR WHICH DEDUCTION UNDER SEC. 80-IB(10) WAS NO T CLAIMED. ' 8. WE HAVE ALSO NOTED THAT AS EVIDENT FROM THE FOLL OWING CHART, THE CONDITIONS OF PLOT SIZE AS REQUIRED BY S ECTION 80- IB(10) OF THE ACT ARE INDEPENDENTLY SPECIFIED BY PH ASE II. SR NO. PARTICULARS PHA SE - I PHASE - II TOTAL 1 TOTAL PLOT AREA 7723 (IN ACRES 1.99) 20577 (IN ACRES 5.08) 28300 2 RESIDENTIAL (SALEABLE BUILT-UP AREA) 13511 21970 35481 3 AREA COVERED BY AMENITIES** 1060 1596 2656 4 COMMERCIAL AREA 1090 - 1090 TOTAL (2+3+4) 15661 23566 39228 ** PLEASE NOTE THAT THE AREA COVERED BY COMMON AME NITIES IS DIVIDED AMONGST PHASE-I & PHASE-II CONSIDERING THE TOTAL RESIDENTIAL SALEABLE AREA OF THE RESPECTIVE PHASES. 9. IN THIS VIEW OF THE MATTER AND BEARING N MIND TH E ENTIRETY OF THE CASE, WE ARE UNABLE TO APPROVE THE ORDER OF THE CIT(A) IN DECLINING DEDUCTION U/S.80-IB(10) OF THE ACT. IN O UR CONSIDERED VIEW AND IN THE LIGHT OF THE DECISIONS O F THE CO- ORDINATE BENCHES, THE ASSESSEE IS ENTITLED TO DEDUC TION U/S.80- IB(10) OF THE ACT. WE ACCORDINGLY DIRECT THE ASSE SSING OFFICER TO GRANT THE SAME. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. 6 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BE HALF OF THE REVENUE. WE THEREFORE UPHOLD THE DECISION OF THE C IT(A) IN ALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT. 3. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 9 TH DAY OF MAY, 2013. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 9 TH MAY, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DCIT, CIRCLE-1(1), PUNE. 3. THE CIT(A)-I, PUNE. 4. THE CIT-I, PUNE. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.