Runwal Constructions, Pune V. ITO, Ward 3(1), Pune, Pune

ITA 339/PUN/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76332 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 18-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.339/PN/2011 (A.Y. 2004-05) RUNWAL CONSTRUCTIONS 41/12, RUNWAL PLAZA, KARVE ROAD, PUNE 411004 PAN: AABFR4435R APPELLANT VS. ITO, WARD 3(1), PUNE RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI P.L . PATHADE DATE OF HEARING: 26.03.2014 DATE OF ORDER : 27.03.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [SHORT C IT(A)] PUNE, DATED 24.01.2011 FOR A.Y. 2004-05 ON THE FOLLOWING GROUNDS. 1. THE LEARNED CIT (A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) IN RESPECT OF THE ADDITION OF RS.24,1 9,516/- MADE ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEDUCTI ON U/S 80IB(10). 2. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE ASSES SEE HAD MADE A WRONG CLAIM OF DEDUCTION AND HENCE, THE LEVY OF PENALTY WAS JUSTIFIED. 3. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THE A SSESSEE HAD VOLUNTARILY SURRENDERED THE CLAIM OF DEDUCTION MADE U/S 80 IB (10) AND HENCE, THERE WAS NO QUESTION OF LEVY OF ANY PENALTY U/S 271(1)(C). 4. THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT BECAUSE OF CHANGE IN BUSINESS CIRCUMSTANCES, THE ASSESSEE HAD TO CONSTRUCT BIGGER FLATS OF MORE THAN 1500 SQ.FT. AND HENCE, THE ASSESSEE ON ITS OWN VOLUNTARI LY 2 SURRENDERED THE CLAIM MADE U/S 80 IB(10) AND HENCE, THERE WAS NO REASON TO LEVY THE PENALTY. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. THE ASSESSING OFFICER HAD LEVIED THE PENALTY U/S .271(1)(C) WITH REGARD TO THE DISALLOWANCE OF CLAIM U/S. 80IB( 10) AMOUNTING TO 24,19,517/-. THE ASSESSING OFFICER IN QUANTUM PRO CEEDINGS DISALLOWED CLAIM U/S.80IB(10) AMOUNTING TO 24,19,516/-. ACCORDING TO ASSESSING OFFICER, THE PROJECT IN QUES TION WAS COVERED IN SECTION 80IB(10) BUT THE CONSTRUCTION WA S STILL INCOMPLETE, THE DESIGN OF CERTAIN FLATS WERE CHANGE D TO MORE THAN 1500 SQ. FT. EACH AS PER MARKET DEMAND. ACCORDINGL Y, NOTICE WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAD WITHDRAWN AND SURRENDERED THE CLAIM U/S. 80IB(1 0) FOR A.Y. 2003-04 AND 2004-05. ACCORDINGLY, THE ASSESSING OF FICER ASSESSED THE PROFIT OF 24,19,516/- FROM 80IB(10) PROJECT WITHOUT GIVING ANY DEDUCTION U/S.80IB(10). THE ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE MADE WRONG CLAIM U/S.80I B(10) BECAUSE CERTAIN FLATS EXCEED 1500 SQ. FT. AREA LIMI T AS PRESCRIBED UNDER THE PROVISIONS OF SECTION 80IB(10) WHICH WAS SURRENDERED BY ASSESSEE. THE ASSESSING OFFICER HAD LEVIED THE PENALTY FOR THE SAME. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) CONFIRME D THE PENALTY IN QUESTION. BEFORE US, THE LEARNED AUTHOR IZED REPRESENTATIVE SUBMITTED THAT THE CIT(A) ERRED IN C ONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF ACT IN RESPECT OF THE ADDITION OF 24,19,516/- ON ACCOUNT OF DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB(10). THE ASSESSEE HAD VOLUNTARILY SURREND ERED THE CLAIM MADE U/S.80IB(10), HENCE, THE PENALTY U/S.271 (1)(C) WAS NOT JUSTIFIED. THE LEARNED AUTHORIZED REPRESENTATI VE HAS 3 SUBMITTED THAT THE ISSUE OF SIZE OF FLATS I.E. 1500 SQ. FT. AS APPLICABLE TO THE PRESENT CASE WAS DEBATABLE ISSUE AS ON DATE, SO THE PENALTY IS NOT JUSTIFIED ON THE BASIS OF DISALL OWANCE OF THE CLAIM U/S.80IB(10) BASED ON THE SIZE OF FLATS. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUPPORT ED THE ORDER OF CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS CLAIMED DEDUC TION U/S.80IB(10) AMOUNTING TO 24,19,516/- WAS MADE SINCE THE ASSESSEE CLAIMED TO BE ENTITLED FOR CLAIM OF DEDUCT ION. SUBSEQUENTLY, DUE TO THE CHANGE IN THE PLAN, IT WAS DECIDED TO CONSTRUCT CERTAIN FLATS OF AREA MORE THAN 1500 SQ. FT. DUE TO THE MARKET DEMAND. THE ASSESSEE CLAIMED TO HAVE REVISE D ITS PLAN WITH THE REGARD TO THE SIZE OF THE FLAT SUBSEQUENT TO THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE WHOLE CLAIM OF DEDUCTION U/S.80IB(10) WAS WITHDRAWN. IT IS A SETTLED LEGAL POSITION THAT THE PENALTY IS NOT AUTOMATIC ON THE BASIS OF ADDITI ON OR DISALLOWANCE. THE PENALTY PROCEEDINGS ARE INDEPEND ENT OF THE QUANTUM OF THE PROCEEDINGS. THE MAIN BASIS FOR DIS ALLOWING THE CLAIM U/S.80IB(10) IS THE EXCESS SIZE OF CERTAIN FL ATS IN THE PROJECT. SIZE OF FLAT IS ONE OF THE CONDITIONS FOR CLAIMING DEDUCTION UNDER THE PROVISIONS OF SECTION 80IB(10). INITIALLY, THE ASSESSEE PLANNED TO CONSTRUCT THE ALL FLATS AT WITH IN PRESCRIBED LIMIT OF 1500 SQ. FT., BUT SUBSEQUENTLY, DUE TO MAR KET CONDITIONS, CERTAIN FLATS WERE PLANNED TO BE MADE EXCEEDING OF 1500 SQ. FT. ACCORDINGLY, THE PLAN WAS REVISED. WITHOUT PREJUDI CE TO THE MERIT OF THE CLAIM IN QUANTUM WHICH IS NOT BEFORE US, BUT THE SAME IS BASIS FOR LEVYING PENALTY UNDER THE PROVISIONS OF S ECTION 271(1)(C) OF ACT. AS STATED ABOVE, THE ASSESSEE HAS HIMSELF SURRENDERED THE CLAIM OF DEDUCTION U/S. 80IB(10). WE ARE OF TH E VIEW THAT FOR CLAIMING OF DEDUCTION U/S.80IB(10) OF ACT, ONE OF T HE CONDITIONS IS SIZE OF THE FLAT I.E. 1500 SQ. FT. AS APPLICABLE TO THE ASSESSEES PROJECT. IN THE PRESENT CASE, CERTAIN FLATS WERE F OUND TO BE 4 EXCEEDING THE PRESCRIBED LIMIT DUE TO REVISION IN P LAN LOOKING TO THE MARKET CONDITIONS. BUT THE FACT REMAINED THAT PRORATA DEDUCTION COULD HAVE BEEN CLAIMED BY THE ASSESSEE. THE ISSUE OF PRORATA CLAIM OF DEDUCTION U/S.80IB(10) IS DEBATABL E ISSUE EVEN AS ON DATE. THE PRORATA DEDUCTION HAS BEEN APPROVE D BY THE VARIOUS JUDICIAL FORUMS INCLUDING ITAT, PUNE BENCHE S. AS STATED ABOVE, WITHOUT PREJUDICE TO THE MERIT OF THE CLAIM IN QUANTUM PROCEEDINGS, WE ARE OF THE VIEW THAT THE PENALTY IS NOT JUSTIFIED ON DEBATABLE ISSUE. IT IS UNDISPUTED THAT THE SIZE OF THE FLAT IS DEBATABLE ISSUE AS FAR AS THE PRORATA CLAIM OF THE DEDUCTION U/S.80IB(10) IS CONCERNED, WHILE CERTAIN FLATS EXCE ED THE PRESCRIBED LIMIT. IN VIEW OF ABOVE, WE ARE OF TH E VIEW THAT THE PENALTY IS NOT JUSTIFIED ON THE DISALLOWANCE OF CLA IM OF DEDUCTION U/S.80IB(10) ON DEBATABLE ISSUE AS DISCUSSED ABOVE. ACCORDINGLY, THE SAME IS DIRECTED TO BE DELETED. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF MARCH, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH MARCH, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE