M/S INDRAJEET ENGINEERS PVT.LTD, NAGPUR V. INCOME TAX OFFICER, WARD-1(2), NAGPUR

ITA 340/NAG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7490 (ITAT-NAGPUR)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Competent authority
• Section: 234B; 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA N O. 340 /NAG. / 2017 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. INDRAJEET ENGINEERS PVT. LTD. 265, MILENIUM SHOPPING MALL, BAJAJ NAGAR, NAGPUR, MAHARASHTRA - 440 010 PAN AABCI 3332 F APPELLANT V/S INCOME TAX OFFICER, WARD - 1(2) AAYKAR BHAWAN, NAGPUR - 440 001 .... RESPONDENT A S SESSEE BY : SHRI K. P. DEWANI REVENUE BY : SHRI GITESH KUMAR DATE OF HEARING 08.05.2018 DATE OF ORDER 14.06 .2018 O R D E R PER SHAMIM YAHYA , A .M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 1, NAGPUR DATED 02.06.2017 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. 2. T HE GROUNDS OF APPEAL READ AS UNDER 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION AT RS.27,91,163 / - MADE BY A.O . BY DISALLOWING THE CLAIM OF DEDUCTION U/S . 80IB(10) OF I.T. ACT, 1961. 2. THE ADDITION MADE BY A.O. BY DISALLOWING T HE CLAIM OF DEDUCTION U / S . 80IB(10) OF IT. ACT 1961 AND CONFIRMED BY CIT(A) IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 3. THE LEARNED A.O. AND HON'BLE CIT(A) ERRED IN HOLDING THAT ASSESSEE IS NOT HAVING PROPER SANCTION OF PROJECT F ROM LOCAL AUTHORITY AS PER PROVISION OF SECTION 80IB(10) OF IT. ACT 1961. 2 ITA NO. 340/NAG./2017 M/S. INDRAJEET ENGINEERS PVT. LTD. 4. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S 234A, 234B & 234C OF INCOME TAX ACT 1961. WITHOUT PREJUDICE THE INTEREST LEVIED U/ S . 234A, 234B AND 234C IS UNJUSTIFIE D AND UNWARRANTED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM THE BUSINESS OF CIVIL CONSTRUCTION IN RESPECT OF HOUSING PROJECTS NAMELY GREEN COURT PROJECT AND GREEN VALLEY PROJECT. RETURN HAS BEEN FILED ON 12.10.2010 DECLARING IN COME OF RS.5,92,710/ - AFTER CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT. THE ASSESSEE HAS ALSO SUBMITTED REQUIRED AUDIT REPORT IN FORM NO. 3CB AND 3CD ALONGWITH FORM NO. 10CCB IN SUPPORT OF ITS CLAIM OF DEDUCTION THE ASSESSING OFFICER HAS DISALLOWED THIS D EDUCTION BY MAKING REFERENCE TO CERTAIN DEFECTS/MISTAKES IN FORM NO. 10CCB . ASSESSING OFFICER HAS ALSO RELIED ON THE FACT THAT THE ASSESSEE HAS SUBMITTED COMPLETION CERTIFICATE FROM CONCERNED GRAMPANCHAVAT AT GODHANI WHICH IS NOT THE COMPETENT AUTHORITY TO DO SO. THE ASSESSEES REPLY FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS STATING THAT IT HAS TAKEN APPROVAL FOR BUILDING PERMISSION FROM THE CONCERNED GRAM PANCHAYAT AS PER PROVISIONS OF THE BOMBAY VILLAGE PANCHAYAT ACT, 1958 HAS NOT BEEN ACCEPTED BY THE ASSESSING OFFICER IN VIEW OF PROVISIONS OF MAHARASHTRA REGIONAL TOWN PLANNING ACT, 1966. THE ASSESSING OFFICER HAS ACCORDINGLY MADE THE IMPUGNED ADDITION. 4. UP ON THE ASSESSEE'S APPEAL , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) C ONFIRMED THE ADDI TION BY ACCEPTING THE ASSESSING OFFICER'S REASONING THAT APPROVAL FROM COMPETENT AUTHORITY HAS NOT BEEN APPROVED. 5. AGAINST THE ABOVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE US . 6 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY SEVERAL 3 ITA NO. 340/NAG./2017 M/S. INDRAJEET ENGINEERS PVT. LTD. DECISIONS OF THE TRIBUNAL AND ALSO FROM THE HON'BLE JURISDICTIONAL HIGH COURT . IN THIS REGARD , THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE A SSESSEE ARE SUMMARIZED AS UNDER: A) THE ASSESSEE HAS DERIVED INCOME FROM DEVELOPMENT OF HOUSING PROJECT U/S 80IB OF I .T. ACT 1961. ASSESSEE HAS FULFILLED THE REQUISITE CONDITIONS FOR GRANT OF DEDUCTION U/S 80IB. THE HOUSING PROJECT WAS IN VILLAGE GODHANI AND LOCAL AUTHORITY WAS GRAM PANCHAYAT, GODHANI. SANCTION OF MAP AND COMPLETION CERTIFICATE FOR HOUSING PROJECT WAS OBTAINED FROM GRAM PANCHAYAT AND PLACED ON RECORD. B) A.O. HAS OBSERVED THAT GRAM PANCHAYAT GODHANI IS HOT THE LOCAL AUTHORITY TO SANCT ION THE PLANS OF HOUSING PROJECT AND TO ISSUE COMMENCEMENT CERTIFICATE AND COMPLETION CERTIFICATE. A.O. HAS NOT DISPUTED FULFILLMENT OF OTHER CONDITIONS OF ELIGIBILITY FOR GRANT OF DEDUCTION U/S 80IB OF IT. ACT 1961. WITH ABOVE OBSERVATION A.O. CONCLUDED T HAT ASSESSEE HAS NOT SATISFIED THE REQUISITE CONDITION FOR GRANT OF DEDUCTION U/S 80IB AND DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB. HON'BLE CIT(A) UPHELD THE ORDER OF A.O. C) ISSUE IN DISPUTE IS SQUARELY COVERED BY DECISION OF HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF M/S. SWAPNASHILP DEVELOPERS VIDE ORDER DATED 24/10/2016 IN ITA NO.25 OF 2016. D) HON'BLE CIT (A) IN THE CASE OF M/S. SWAPNASHILP DEVELOPERS AFTER CONSIDERING PROVISIONS OF SECTION 18 OF MAHARASHTRA REGIONAL TOWN PLANNING A CT 1966, PROVISIONS OF SEC. 52 OF THE BOMBAY VILLAGE PANCHAYAT ACT, 1958, PROVISIONS OF SECTION 10 (20) OF IT. ACT, 1961 AND VARIOUS DECISIONS OF HON'BLE ITAT HAS HELD THAT GRAM PANCHAYAT IS THE LOCAL AUTHORITY FOR THE PURPOSE OF SECTION 80IB. ORDER OF HON 'BLE CIT(A) HAS BEEN UPHELD BY HON'BLE ITAT, NAGPUR BENCH VIDE ORDER DATED 22/11/2015 IN ITA NO.35 & 36/NAG/2014. E) REVENUE HAS FILED AN APPEAL BEFORE HON'BLE HIGH COURT, NAGPUR BENCH AGAINST THE ORDER OF HON'BLE ITAT. HON'BLE JURISDICTIONAL HIGH COUR T DISMISSED THE APPEAL FILED BY REVENUE AND UPHELD THE ORDER OF ITAT IN ITA NO. 25 OF 2016 VIDE JUDGEMENT DATED 24/10/2016. F) THE ASSESSEE HAS DEVELOPED HOUSING PROJECT AT GODHANI VILLAGE WHICH IS IN AREA FALLING UNDER THE SUPERVISION OF VILLAGE PANC HAYAT GODHANI. SECTION 52 OF THE BOMBAY VILLAGE PANCHAYAT ACT, 1958 PROVIDES THAT SANCTION OF CONSTRUCTION OF BUILDING WITHIN THE LIMITS OF VILLAGE HAS TO BE GRANTED BY THE PANCHAYAT. ACCORDINGLY, THE VILLAGE PANCHAYAT IS LOCAL AUTHORITY AND COMPETENT AUTH ORITY WHICH HAS APPROVED THE HOUSING PROJECT OF ASSESSEE COMPANY. G) SECTION 10(20) OF IT. ACT, 1961 RELATES THE INCOME OF LOCAL AUTHORITY BEING EXEMPT UNDER THE PROVISION OF IT. ACT, 1961. EXPLANATION TO SEC. 10(20) PROVIDES MEANING OF LOCAL AUTHORITY . EXPL. ( I ) PROVIDES PANCHAYAT AS REFERRED IN CLAUSE (A) OF ARTICLE 243 OF THE CONSTITUTION IS THE LOCAL AUTHORITY. LOCAL AUTHORITY IS NOT DEFINED UNDER THE PROVISION OF IT. ACT 1961 AND THUS IT WOULD BE REASONABLE TO TAKE AID OF SEC. 10(20) TO CONCLUDE TH AT VILLAGE PANCHAYAT IS LOCAL AUTHORITY. H) GRAM PANCHAYAT OF VILLAGE IS THE LOCAL AUTHORITY FOR THE PURPOSE OF SECTION 80 IB OF IT. ACT, 1961. RELIANCE ON: 4 ITA NO. 340/NAG./2017 M/S. INDRAJEET ENGINEERS PVT. LTD. I) HON'BLE HIGH COURT OF JUDICATURE AT BOMBAY, NAGPUR BENCH, NAGPUR ORDER IN ITA NO.25 O F 2016 IN THE CASE OF M/S. SWAPNASHILP DEVELOPERS VIDE ORDER DATED 24/10/2016. II) ITAT ORDER IN ITA NOS.35 & 36/NAG/2014 IN THE CASE OF M/S. SWAPNASHILP DEVELOPERS VIDE ORDER DATED 24/11/2015. III) HON'BLE CIT ORDER IN ORDER NO. CIT(A) - L/546/2011 - 12 IN THE CASE OF M/S. SWAPNASHILP DEVELOPERS VIDE ORDER DATED 22/10/2013. IV) ITAT ORDER IN ITA NO.285/NAG/2015 IN THE CASE OF M/S. HIGH RISE CONSTRUCTION VIDE ORDER DATED 18/01/2017. 7. P ER CONTRA , THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER'S OF AUTHORITIES BELOW. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT IN THE PRESENT CASE THE ASSESSEE HAS DERIVED INCOME FROM DEVELOPMENT OF HOUSING PROJECT U /S.8 0IB OF THE ACT . T HE ASSESSEE HAS CLAIMED TO HAVE FULFILLED ALL THE REQUISITE CONDITIONS FOR GRANT OF DEDUCTION . T HE ASSESSEE HAS SUBMITTED APPROVAL TAKEN ON 26/6/2006 FROM S ECRETARY OF G RAM P ANCHAYAT ALONG WITH COMPLETION CERTIFICATE DATED 28/2/2010 ISSUED BY G RAM P ANCHAYA T. T HE AUTHORITIES BELOW HAVE NOT DISPUTED THE FULFILLMENT OF THE REQUISITE CONDITION FOR DEDUCTION U /S. 80 - IB OF THE ACT, EXCEPT FOR THE CONTENTION THAT THE G RAM P ANCHAYAT WAS NOT THE LOCAL AUTHORITY COMPETENT FOR SANCTION OF PLANS OF HOUSING PROJECT. IN THIS REGARD , WE NOTE THAT IN A SIMILAR CASE IN THE CASE OF M/S. SWAPNASHILP DEVELOPERS WHERE SIMILAR APPROVAL WAS THERE FROM THE G RAM P ANCHAYAT ON 5 .12. 2006. IN THE SAID CASE , THE TRIBUNAL HAD HELD THAT THE G RAM P ANCHAYAT WAS THE COMPETENT AUTHORITY. THE MATTER HAD TRAVELLED TO THE HON'BLE JURISDICTIONAL HIGH COURT . THE HON'BLE JURISDICTIONAL HIGH COURT IN I NCOME T AX A PPEAL NO. 25 & 26 OF 2016 VIDE ORDER DATED 24 TH OCTOBER, 2016 HAS ELABORATELY DEALT WITH THE ISSUE AND CONFIRMED THE ORDER OF THE ITAT BY OBS ERVING AS UNDER : ON HEARING THE LEARNED COUNSEL FOR THE PARTIES AND ON A PERUSAL OF T HE ORDERS OF THE INCOME TAX APPELLAT E COMMISSIONER OF INCOME TAX (APPEALS), IT 5 ITA NO. 340/NAG./2017 M/S. INDRAJEET ENGINEERS PVT. LTD. AP PEARS THAT A CLEAR FINDING OF FACT IS REC ORDED BY BOTH THE AUTHORITIES THAT THE GRAM P ANCHA Y AT - LOCAL AUTHORITY HAD GRANTED THE SANCTION FOR CONSTRUCTION AND DEVELOPMENT OF MORE THAN ONE ACRE OF PLOT AND SEPARATE PERMISSIONS WERE NOT GRANTED BY THE GRAM PANCHAYAT FOR CONSTRUCTION AND DEVELOPMENT IN FAVOUR OF THE VENDORS - OWNERS, FROM WHOM THE ASSESSEE HAD PURCHASED THE PLOTS, BEFORE SECURING THE PERMISSION FROM THE LOCAL AUTHORITY, AS REQUIRED, FOR CLAIMING DEDUCTION UNDER SECTION 80 - IB (10) OF THE ACT, BOTH THE AUTHORITIES HAVE RECORDED A FINDING THAT THE ASSESSEE HAD SATISFIED THE AUTHOR ITIES THAT THE PERMISSION FOR THE HOUSING PROJECT WAS IN RESPECT OF MORE THAN ONE 'ACRE OF PLOT AND THE HOUSING PROJECT WAS COMPLETED WITHIN THE TIME SPECIFIED BY THE PROVISIONS OF SECTION 80IB(10) OF THE ACT. WHILE HOLDING SO, BOTH THE AUTHORITIES HAVE CO NSIDERED THE DOCUMENTS TENDERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS ALSO THE RECORD OF GRAM PANCHAYAT, BESA. THE AUTHORITIES HAVE FURTHER HELD GRAM PANCHAYAT, BESA WAS THE LOCAL AUTHORIT Y GRANTING THE SANCTION OR PERMISSION FOR THE DEVELO PMENT OF THE HOUSING PROJECT. ACCORDING TO BOTH THE AUTHORITIES, THE CONDITIONS THAT WERE REQ U IRED TO BE SATISFIED FOR SEEKING DEDUCTION UNDER THE PROVISIONS OF SECTION 80IB (10) OF THE ACT W ERE SATISFIED IN THE CASE OF THE ASSESSEE AND, THEREFORE, TH E ASSESSING OFFICER HAD COMMITTED AN ERRO R IN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCT ION UNDER T HE SAID PROVISION. WE FIND THAT T HE FINDINGS RECORDED BY THE INCOME TAX APPELLATE TRIBUNAL AND THE COMMISSIONER OF INCOME TAX (APPEALS) ARE BASED ON A PROPER APPRECIATION OF THE MATERIAL ON RECORD AND THEY DO NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THE SUBMISSION MADE ON BEHALF OF THE APPELLANT REVENUE THAT IN SIMILAR MATTERS IN RESPECT OF OTHER DEVELOPMENT PROJECTS, THIS COURT HAS ADMITTED THE APPEALS ON TWO SUBSTANTIAL QUESTIONS OF LAW AND, THEREFORE, THESE APPEALS SHOULD BE ADMITTED IS NOT WELL FOUNDED. WE HAVE PERUSED INCOME TAX APPEAL NOS. 16/2016, 17/2016 AND 20/2010. IN THE SAID APPEALS, IT WAS THE CASE OF THE REVENU E THAT THERE WAS NO PERMISSION FROM THE LOCAL AUTHORITY FOR THE DEVELOPMENT OF ONE ACRE OF PLOT AND SEPARATE PERMISSIONS WERE SECURED FOR CONSTRUCTION OF HOUSES OF INDIVIDUAL PLOT OWNERS. ALSO, IN THOSE APPEALS IT WAS THE CASE OF THE REVENUE THAT THE HOUSI NG PROJECT WAS NOT COMPLETED WITHIN THE TIME PRESCRIBED UNDER SECTION 80IB(10) OF THE ACT. SUCH IS NOT THE CASE HERE. IN THE PRESENT MATTERS, BOTH THE AUTHORITIES HAVE CONCURRENTLY RECORDED A FINDING OF FACT THAT DEVELOPMENT OF THE HOUSING PR OJECT WAS COM PLET ED WITHIN THE TIME PRESCRIBED UNDER SECTION 80IB( 10) OF THE ACT. IN THE ADMITTED APPEALS, THOUGH IT WAS SOUGHT TO BE CANVASSED ON BEHALF OF THE REVE NUE THAT GRAM PANCHAYAT, BESA WAS NOT THE LOCAL AUTHORITY , A SUBSTANTIAL QUESTI ON OF LAW WAS NOT FRAMED IN THAT REGARD. WE FURTHER FIND FRO M A REACTING OF THE JUDGMENT IN THE CASE O F COMMISSIONER OF INCOME TAX VS. CAJETANO MARIO PEREIRA, REPORTED IN 2014 (88) CCH 152, THAT THIS COURT HAD CONSIDERED THE PERMISSION APPRO V A L GRANTED B Y THE VILLAGE PANCHAYAT FOR THE HOUSING PROJECT TO BE AS ONE GRANTED BY THE LOCAL AUTHORITY' IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80IB (10 ) OF THE ACT. 9. NOW WE EXAMINE THE PRESENT CASE ON THE TOUCHSTONE OF ABOVE SAID CASE LAW. WE FIND THAT THE ASSESSEE IN THIS CASE ALSO HAS FULFIL LED ALL THE CONDITIONS AND THE R EVENUE HAS 6 ITA NO. 340/NAG./2017 M/S. INDRAJEET ENGINEERS PVT. LTD. NOT DISPUTED , EXCEPT FOR THE R EVENUE'S CONTENTION THAT SANCTION OF THE HOUSING PROJEC T HAS NOT BEEN OBTAINED FROM COMPETENT AUTHORITY INASMUCH AS THEY HAVE HELD THAT THE GRAM PANCHAYAT IS NOT THE COMPETENT AUTHORITY FOR THE APPROVAL OF THE PROJECT. HOWEVER , WE NOTE THAT SIMILAR CASE IN SIMILAR FACTS AND AT THE RELEVANT DATE OF APPROVAL WHI CH IS SIMILAR AS IN THIS CASE HONOURABLE JUDICIAL HIGH COURT HAS HELD THAT THE APPROVAL BY THE GRAM PANCHAYAT WAS IN ORDER AND SUFFICES THE NEED OF APPROVAL BY THE COMPETENT AUTHORITY. 10. HENCE IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT WE S ET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 11. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4 . 0 6 . 2 0 1 8 SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER N AGPUR , DATED : 1 4 . 0 6 . 2 0 1 8 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR ; (6) GUARD FILE . TRUE COPY BY ORDER ROSHANI , SR. PS ( SR. P.S. / P.S. ) ITAT, NAGPUR