M/s. Goldline Writing Instruments Ltd., Kolkata V. ITO, Ward - 6(3), Kolkata, Kolkata

ITA 350/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78355 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-03-2011
• Court: TRIBUNAL
• Department Lawyers: APURBA DAS JCITSR
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NO.350/KOL/2011 ASSESSMENT YEAR : 2007-08 ( APPELLANT ) (RESPONDENT) M/S.GOLDLINE WRITING INSTRUMENTS LTD., -VS- I.T.O. , WARD-6(3), KOLKATA KOLKATA. (PAN : AABCG 7408 G) FOR THE APPELLANT SHRI SOUMITRA CHOWDHURY, ADVOCATE FOR THE RESPONDENT SHRI APURBA DAS, JCIT,SR.DR DATE OF HEARING : 03.07.2014 DATE OF PRONOUNCEMENT : 03. 07.2014. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF LD. C.I.T.(A)-VI, KOLKATA DATED 24.12.2010 AND PERTAINS TO ASSESSMEN T YEAR 2007-08. 2. THE GROUNDS OF APPEAL IN THIS APPEAL READ AS UN DER :- 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOM E TAX (APPEALS)-VI UPHOLDING THE DISALLOWANCE EXPENSES OF RS.15,00,000/- MADE BY THE ASSESSING OFFICER IS ERRONEOUS IN LAW AS WELL AS ON THE FACTS OF THE CASE. 9. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI UPHOLDING THAT THE DEDUCTION U/S 80IB OF THE INCOME TAX ACT SHOULD NOT BE ALLOWED IS ERRONEOUS IN LAW AS WELL AS ON THE FACTS OF THE CASE. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD/OR AMEND ANY GROUND OF THIS APPEAL. 3. APROPOS GROUND NO.2: AS REGARDS THIS ISSUE THE LD.COUNSEL OF THE ASSESEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. HE SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YR.2006-07 VIDE ORDER DATED 29.12.2011 I N ITA NO.272/KOL/2010 HAS ALLOWED THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB. IN THIS REGARD HE REFERRED TO PARA 11 OF THE SAID ORDER WHICH READS AS UNDER :- 11. THE ONLY DOUBT IN THE MIND OF ASSESSING OFFICE R IS THAT ASSESSEE DOES NOT OWN MINIMUM REQUIREMENT OF ACRE HAS BEEN CLEARLY PROVED BY THE ASSESSEE WHEREBY WITH ITA.NO.350/KOL/2011 M/S.GOLDLINE WRITING INSTRUMENTS LTD., A.YR.2007-08 2 RELEVANT TO THE COPIES OF DOCUMENTS PROVIDE THAT TH E PROJECT FOR CONSTRUCTION IS IN THE EXTENT OF LAND OF 63 COTTAH. FURTHER, WHILE PURCHAS ING THE LAND TOGETHER WITH THE LAND, THE SANCTIONED PLAN FOR PROJECT CONSTRUCTION WAS AL SO PART OF THE PURCHASE. THEN AFTER PURCHASE ASSESSEE ENTRUSTED THE MATTER WITH THE CON TRACTOR FOR COMPLETING THE PROJECT WITHIN THE STIPULATED TIME. THE NEXT DOUBT IN THE MIND OF ASSESSING OFFICER IS THAT THE CONSTRUCTION WAS NOT COMPLETED. THAT DOUBT ALSO REM OVED BY THE EXPLANATION OF THE ASSESSEE THAT THE CONSTRUCTION WAS COMPLETED AND TH E LOCAL AUTHORITY HAS GIVEN COMPLETION CERTIFICATE AS PER THE DECISION OF HONB LE BOMBAY HIGH COURT IN THE CASE OF CIT VS BRAHMA ASSOCIATES [2011] 333 ITR 289 (BOM). THIS IS SUFFICIENT COMPLIANCE. CBDT CIRCULAR RELIED ALSO, HENCE, THE STAND OF THE ASSESSEE. ONCE THE LOCAL AUTHORITY SANCTIONED HOUSING PROJECT IT SHOULD BE CONSIDERED AS ADEQUATE FOR THE PURPOSE OF SECTION 80IB DEDUCTION. HENCE, WE ARE OF THE VIEW T HAT ASSESSEE QUALIFIES FOR THE DEDUCTION UNDER SECTION 80IB(10). ONCE THE ASSESSEE QUALIFIES FOR 80IB BEING THE BENEFICIAL PROVISION AND AS PER THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF BAJAJ TEMP LIMITED VS. CIT [1992] 196 ITR 188 (SC) AND THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANDAMAN & NICOBAR ISLANDS FOREST & PLANTATION DEVELOPMENT CORPORATION LTD. VS CIT [200 6] 280 118 (CAL). THIS RATIO ALSO HELPS THE CONTENTION OF THE SEE AS THE ASSESSEE IS FULFILLING ALL THE CONDITIONS LAID DOWN IN SECTION 80IB(10). THE CLAIM OF THE ASSESSEE FOR THE ABOVE DEDUCTION HAS TO BE CONSIDERED AS QUALIFIED FOR BENEFICIAL DEDUCTION UN DER SECTION 80IB. HENCE, WE ARE OF THE VIEW THAT THE ORDER OF AUTHORITIES TO BE REVERS ED AND THE ASSESSEE SHOULD BE GIVEN WITH THE DEDUCTION CLAIMED UNDER SECTION 80IB AMOUN TING TO RS.1,74,12,766/- AS THE ASSESSEE QUALIFIES FOR THE REQUIREMENT OF CONDITION S LAID DOWN UNDER SECTION 80IB. 4. THE LD. COUNSEL OF THE ASSESSEE FURTHER POINTED OUT THAT THE LD. CIT(A)IN THIS REGARD HAS REFERRED TO THE ORDER OF LD. CIT(A) FOR A.YR.2006-07. HE HAS HELD THAT THE FACTS FOR A.YR. 2007-08 ARE SIMILAR TO THE FACTS OF ASSESSMENT YEAR 2006-07 AS SIMILAR SUBMISSIONS HAVE BEEN MADE BY THE LD. AR IN THIS AS SESSMENT YEAR ALSO, THEREFORE FOLLOWING THE DECISION FOR ASSTT.YEAR 2006-07 HE HE LD THAT DEDUCTION U/S 80IB OF THE ACT WILL NOT BE ALLOWABLE FOR A.YR.2007-08. IN VIEW OF THE ABOVE THE LD. COUNSEL OF THE ASSESEE SUBMITTED THAT SINCE IN THE A.YR. 2006- 07 THE TRIBUNAL HAS REVERSED THE ORDER OF THE LD. CIT(A) AND HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB, THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB OF THE ACT FOR THIS A.YR ALSO NEEDS TO BE ALLOWED. 5. THE LD. DR, ON THE OTHER HAND, COULD NOT CONTRAD ICT THE ABOVE SUBMISSIONS OF THE LD.COUNSEL OF THE ASSESSEE. 6. UPON CAREFUL CONSIDERATION WE RESPECTFULLY FOLLO W THE PRECEDENT FROM THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE AS ABOVE. WE FIND THAT THE SUBMISSIONS ITA.NO.350/KOL/2011 M/S.GOLDLINE WRITING INSTRUMENTS LTD., A.YR.2007-08 3 OF THE LD. COUNSEL OF THE ASSESSEE ARE CORRECT IN T HIS REGARD. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. APROPOS GROUND NO.1 : DISALLOWANCE OF EXPENSES O F RS.15,00,000/- : DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE CLAIMED ESTIMATED EXPENSES REGENT GARDEN AMOUNTING TO RS.15,00,00 0/- AS A PART OF CONSTRUCTION ACTIVITY EXPENSES . THE ASSESSEE CLAIMED THAT FOR CALCULATION OF COST OF AREA SOLD, THEY HAVE TO KNOW THE TOTAL COST OF THE PROJECT, TO TAL AREA OF THE PROJECT, AREA SOLD DURING THE YEAR, COST INCURRED TILL 31 ST MARCH AND ESTIMATED EXPENSES FOR COMPLETION OF PENDING WORK. IT WAS SUBMITTED THAT THESE ESTIMATED EXPENSES WERE INCLUDED TO DETERMINE THE COST OF THE AREA SOLD. THE A.O. WAS O F THE OPINION THAT THIS ESTIMATION OF EXPENDITURE WAS WITHOUT ANY BASIS AND THEREFORE DIS ALLOWED THIS AMOUNT OF RS.15,00,000/-. 8. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THE DETAILS OF BREAK-UP OF THESE ESTIMATED EXPENSES AS UNDER :- 1. BUILDING MATERIAL 121,538.00 2. COMMISSION & BROKERAGE 636,719.00 3. CONVEYANCE 3,649.00 4. ELECTRIC INSTALLATION 177,825.00 5. ELECTRIC CONNECTION CHARGES 123,792.00 6. GENERAL EXPENSES 25,521.00 7. GENETOR CHARGES 30,713.00 8. LEGAL EXPENSES 2,700.00 9. MUNICIPAL TAX 66,624.00 10. PRINTING & STATIONERY 4,053.00 11. PROFESSIONAL FEES 119,092.00 12. REPAIR & MAINTENANCE 12,863.00 13. SECURITY & SERVICES CHARGES 82,243.00 14. TELEPHONE CHARGES 23.50 15. CLEANING & SWEEPER CHARGES 12,525.00 16. SITE EXPENSES 16,847.00 17. DIESEL EXPENSES FOR GENERATOR 63,272.00 1,500,000.00 LD.CIT(A) OBSERVED THAT FROM THE ABOVE DETAILS IT C AN BE SEEN THAT MAJORITY OF THESE EXPENSES DO NOT HAVE ANY DIRECT NEXUS WITH THE COST OF CONSTRUCTED AREA. THAT THEY ARE GENERAL EXPENSES FOR RUNNING THE BUSINESS OF THE AS SESSEE. THAT THE ASSESSEE CANNOT BE ITA.NO.350/KOL/2011 M/S.GOLDLINE WRITING INSTRUMENTS LTD., A.YR.2007-08 4 ALLOWED TO ESTIMATE THESE FUTURE EXPENSES AND CLAIM THESE IN THE CURRENT YEAR WHEN THEY HAVE NOT BEEN INCURRED AT ALL. IN VIEW OF THE ABOVE DISCUSSION HE UPHELD THE DISALLOWANCE OF THESE EXPENSES OF RS.15,00,000/- MA DE BY THE AO. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 9. THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT T HE ASSESSEE HAS MADE PROPER ESTIMATES AND THE SAME BE ALLOWED. ALTERNATIVELY TH E LD. COUNSEL CONTENDED THAT SINCE THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT EVEN THE ABOVE EXPENSE IS DISALLOWED, THE SAME WILL GO TO ENHANCE THE PROFIT OF THE ASSESSEE WHICH WILL BE ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT. SO THER E WILL BE NO TAX IMPLICATION ON THE ASSESSEE. THE LD. DR IS HEARD. 10. UPON CAREFUL CONSIDERATION, WE FIND THAT THE AL TERNATIVE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE IS A COGENT ONE. EVEN IF TH E ABOVE EXPENSES ARE DISALLOWED THE SAME WILL GO TO INCREASE THE PROFIT OF THE ASSESSEE WHICH WILL BE IN TURN BE ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT. SO THERE WILL BE NO TAX IMPLICATION ON THE ASSESSEE. IN THESE CIRCUMSTANCES WE ACCEPT THAT DISALLOWANCE OF THE EXPENSES WILL NOT RESULT IN ANY TAX PAYMENTS ON THE PART OF ASSESSEE. WE HOLD ACCOR DINGLY. 11. IN THE RESULT THE APPEAL OF THE ASSESEE STANDS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE COURT ON 03.07.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 03.07.2014. R.G.(.P.S.) ITA.NO.350/KOL/2011 M/S.GOLDLINE WRITING INSTRUMENTS LTD., A.YR.2007-08 5 COPY OF THE ORDER FORWARDED TO: 1. M/S.GOLDLINE WRITING INSTRUMENTS LTD., 8/1, LAL BAZ AR STREET, 1 ST FLOOR, KOLKATA- 700001. 2 I.T.O., WARD-6(3), KOLKATA. 3 . CIT(A)VI, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES