ACIT 15(2), MUMBAI V. EKTA SANKALP DEVELOPERS, MUMBAI

ITA 3589/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71995 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C TIWARI MS NATASHA MANGAT
• Keywords: Wrong claim
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND SANJAY ARORA (AM) . . , , ./I.T.A. NO.3589/MUM/2012 ( / ASSESSMENT YEAR : 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX, 15(2), ROOM NO.113, MATRU MANDIR, TARDEO ROAD, MUMBAI-400008 / VS. M/S EKTA SANKALP DEVELOPERS , 401, GURUMARK BUSINESS PLAZA, NEAR GURUNANAK HOSPITAL, KALANAGAR, BANDRA (E), MUMBAI-400051. ( ( / APPELLANT) .. ( ) ( / RESPONDENT) ./ ./PAN/GIR NO. : AAAAE2019E ( /: APPELLANT BY SHRI GIRIJA DAYAL ) ( , / RESPONDENT BY SHRI S .C.TIWARI/ MS.NATASHA MANGAT , . / DATE OF HEARING : 9.12.2013 , . /DATE OF PRONOUNCEMENT : 27.12.2013 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSM ENT YEAR 2007-08 AGAINST THE ORDER OF LD. CIT(A) DATED 14.3.2012 ON FOLLOWING G ROUNDS : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 271(1)( C ) OF TH E INCOME TAX ACT, 1961 BY THE AO AT RS.3,82,88,250/- ON THE ASSESSEE FOR WR ONGLY CLAIMING PROPORTIONATE DEDUCTION UNDER SECTION 80IB(10) IN ITS RETURN OF I NCOME THOUGH IT DID NOT FULFILL THE CONDITIONS REQUIRED FOR ALLOWANCE OF THE SAID D EDUCTION 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS AN AOP AND DEVELOPED A HOUSING PROJECT IN THE NAME OF EKTA MEADOWS. AS PER RETURN FILED FOR THE ASSESSMENT YEAR, THE ASSESSEE DECLARED PROFIT ON ACCOUNT OF THE SAID PROJECT OF RS.17.50 CRORES. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED PROPORTIONA TE DEDUCTION UNDER SECTION 80IB(10) AT RS.11,37,50,000/- ON ACCOUNT OF TOTAL AREA OF 312 FLATS HAVING BUILT UP AREA LESS THAN 1000 SQ.FT EACH, WHICH CONSTITUTES 65% OF TOTAL PROFIT OF THE PROJECT. IN THE RETURN, THE ASSESSEE CLAIMED THAT BALANCE PR OFIT OF RS.6,12,50,000/- REPRESENTS TAXABLE INCOME ON ACCOUNT OF TOTAL AREA OF 216 FLA TS HAVING BUILT UP AREA EXCEEDING I.T.A. NO.3589/MUM/2012 2 1000 SQ. FT. EACH, WHICH CONSTITUTES 35% OF THE TOT AL PROFITS. THE AO DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND STATED THAT ONCE THE ASS ESSEE VIOLATED THE CONDITION OF SECTION 80IB(10), THE CLAIM OF DEDUCTION U/S 80IB WHICH IS OTHERWISE AVAILABLE NOT AVAILABLE TO THE ASSESSEE. IN VIEW OF ABOVE, THE A O INITIATED PENALTY PROCEEDINGS U/S 271(1)( C ) OF THE ACT AND LEVIED MINIMUM PENALT Y OF RS.3,82,88,250/- ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME, AS TH E DEDUCTION CLAIMED U/S 80IB(10) IN THE RETURN OF INCOME WAS DISALLOWED. BEING AGGRIEVE D, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE VIDE PARAS 3.2 AND 3.3 OF THE IMPUGNED ORDER HAS HELD THAT THE PEN ALTY LEVIED BY AO IS NOT JUSTIFIED AND DELETED THE SAME. THE SAID PARAS OF THE ORDER OF LD. CIT(A) VIZ 3.2 AND 3.3 READS AS UNDER : 3.2 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF TH E AO IN THE ASSESSMENT ORDER AND PENALTY ORDER AS WELL AS THE DETAILED SUB MISSIONS OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE CASE LAWS CITED BY THE L D. AR OF THE APPELLANT. THE ONLY POINT OF DISPUTE IN THE PRESENT PENALTY PROCEE DINGS IS REGARDING THE AVAILABILITY OF DEDUCTION U/S. 80-LB ON PROPORTIONA TE BASIS ON THOSE FLATS, HAS FULFILLED ALL THE CRITERIAS OF SECTION 801B, I.E. HAVING AREA LESS THAN 1000 SQ. FT, WHICH CONSISTS APPROXIMATELY 65% IN THIS CASE. THE AO IS OF THE VIEW THAT ONCE ANY OF THE CONDITIONS OF SECTION 80-LB IS VIOLATED BY THE BUILDER APPELLANT , THEN THE APPELLANT LOOSES BENEFIT OF DEDUCTION IT ITS EN TIRETY AND SUCH DEDUCTION CANNOT BE AVAILED ON PRO-RATA BASIS/PROPORTIONATE B ASIS EVEN ON THOSE FLATS WHICH DOES NOT VIOLATE THE SIZE LIMIT PRESCRIBED U/ S 801B. ON THE OTHER HAND, THE CASE OF THE APPELLANT IS THAT IT IS ELIGIBLE FOR DE DUCTION U/S. 80-LB ON PRO-RATA BASIS ON THOSE FLATS WHERE THERE IS NO VIOLATION OF SECTION 80-LB. IT IS NOTED THAT IN VARIOUS DECISIONS OF ITAT/HIGH COURT OF BOMBAY, THE ISSUE OF DEDUCTION U/S. 80-IB HAVE BEEN EXAMINED FROM DIFFERENT ANGLES. IN THE CASE OF SISTER CONCERN OF THE APPELLANT, I.E M/S. EKTA HOUSING P. LTD., IT HA S BEEN HELD BY THE JURISDICTIONAL ITAT THAT PROPORTIONATE DEDUCTION CAN BE ALLOWED U/ S. 80-LB IN RESPECT OF THOSE FLATS, WHICH FULFILLS THE CONDITIONS OF SECTION 80- LB. THIS DECISION HAS FOLLOWED THE DECISION OF CALCUTTA ITAT IN THE CASE OF BENGAL AMB UJA HOUSING DEVELOPMENT LTD., WHICH IS ALSO ENDORSED BY THE CALCUTTA HIGH C OURT. THEREFORE, IT IS NOW CLEAR THAT THE APPELLANT IS ELIGIBLE FOR PROPORTIONATE /P RO - RATA DEDUCTION OF 80-IB(10) AND TO THIS EXTENT, THE OBSERVATION OF THE AO IN AS SESSMENT ORDER AS WELL AS IN THE PENALTY PROCEEDINGS THAT PROPORTIONATE DEDUCTIO N IS NOT ALLOWABLE DOES NOT STAND IN THE LIGHT OF ALL THE ABOVE REFERRED LATEST JUDICIAL PRONOUNCEMENTS. 3.3 AS REGARDS THE CONFIRMATION OF ADDITIONS IN QU ESTION BY THE THEN CIT(A) IN THE FIRST APPEAL, IT IS NOTED THAT THE SAID ORDER W AS PASSED WHEN THE ABOVE REFERRED DECISIONS WERE NOT AVAILABLE BEFORE THE CI T(A). THE MATTER IS NOW PENDING BEFORE THE HONBLE ITAT THEREFORE, NO COMME NTS ARE REQUIRED ON THIS ISSUE. HOWEVER, AS REGARDS THE CONCEALMENT OF PENAL TY IS CONCERNED, ONE HAS TO SEE IT THERE HAS BEEN FURNISHING OF INACCURATE PART ICULARS OF INCOME AND BY FURNISHING INACCURATE PARTICULARS OF INCOME WHETHER ANY ATTEMPT OF CONCEALMENT OF INCOME HAS BEEN MADE BY THE ASSESSEE. IN THE INS TANT CASE, IT IS NOTED THAT THE APPELLANT HAS MADE A CLAIM U/S. 80-IB ON THE BA SIS OF THE AUDIT REPORT AND PRIMA FACIE IT DOES NOT APPEAR TO BE A CASE, WHERE THE APPELLANT HAS MADE A I.T.A. NO.3589/MUM/2012 3 FALSE CLAIM OR A CLAIM, WHICH IS ABSOLUTELY WRONG A ND NOT A DEBATABLE CLAIM AT ALL. THE CENTRAL ISSUE INVOLVED IN THIS APPEAL IS LIABIL ITY OF DEDUCTION ON PROPORTIONATE BASIS, WHICH IS A HIGHLY DEBATABLE ISSUE AND VARIOU S HIGHER COURTS INCLUDING THE JURISDICTIONAL ITAT, MUMBAI HAS DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT INCLUDING IN THE CASE OF SISTER CONCERN OF THE APPE LLANT. THEREFORE, I AGREE WITH THE APPELLANT THAT IN THE LIGHT OF THE APEX COURT D ECISION IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD. (SUPRA), LEVY OF PENALTY DOE S NOT APPEAR APPROPRIATE ON THE FACTS OF THIS CASE. ACCORDINGLY, THE PENALTY LE VIED BY THE AO IS NOT JUSTIFIED, HENCE, THE SAME IS DIRECTED TO BE DELETED. HENCE THIS APPEAL BY DEPARTMENT. 4. AT THE TIME OF HEARING, THE LD. AR SUBMITTED TH AT THE RETURN OF INCOME WAS ACCEPTED AS PER RETURN OF INCOME AND THE PENALTY WAS LEVIED ONLY ON ACCOUNT OF DISALLOWANCE OF PROPORTIONATE DEDUCTION CLAIMED BY ASSESSEE U/S 80IB(10) OF THE ACT OF RS.11,37,50,000/- ON THE GROUND THAT SOME OF THE FL ATS IN THE HOUSING PROJECT DEVELOPED BY ASSESSEE WERE HAVING INDIVIDUAL FLAT S SIZE OF MORE THAN 1000 SQ. FT BUILT UP AREA. LD. AR REFERRED THE ORDER OF ITAT IN THE ASSESSEES OWN CASE IN EKTA SANKALP DEVELOPERS V/S ADDL. CIT IN ITA NO. ITA NO.3276/MUM /2010, DATED 28.9.2012 AND SUBMITTED THAT IN THE APPEAL FILED BY ASSESSEE, THE TRIBUNAL BY FOLLOWING THE DECISION OF HONBLE KOLKATA CALCUTTA HIGH COURT IN THE CASE OF BENGAL AMBUJA HOUSING DEVELOPMENT LTD. DATED 5.1.2007 IN INCOME TAX APP EAL NO. 458 OF 2006 AND ITS DECISION IN THE CASE OF SISTER CONCERN OF THE ASSES SEE IN DCIT V/S M/S EKTA HOUSING PVT.LTD IN ITA NO.3649/MUM/2009, DATED 20.5.2011 HE LD TO ALLOW DEDUCTION TO THE ASSESSEE U/S 80IB(10) ON PRO-RATA BASIS FOR THE FLA TS HAVING BUILT UP AREA LESS THAN 1000 SQ. FT. I.E. 312 FLATS OF 65% OF THE PROFIT WHICH COMES TO RS.11,37,50,000/- AND ACCORDINGLY THE APPEAL OF THE ASSESSEE WAS ALLOWED BY REVERSING THE ORDER OF LD. CIT(A). LD. AR REFERRED PAGES 1 TO 10 OF THE PAPER BOOK WHI CH CONTAIN A COPY OF THE SAID ORDER OF THE TRIBUNAL. LD. AR SUBMITTED IN THE QUANTUM APPEAL, THE DISALLOWANCE MADE BY DEPARTMENT WAS DELETED BY TRIBUNAL AND ACCORDINGL Y THE VERY BASIS FOR WHICH PENALTY WAS LEVIED BY AO DOES NOT SURVIVE. LD. DR HAS NOT DISPUTED THE ABOVE CONTENTION OF LD. AR. 5. IN VIEW OF ABOVE FACTS AND CONSIDERING THE ORDER OF TRIBUNAL DATED 28.9.2012 IN ASSESSEES OWN CASE IN THE QUANTUM PROCEEDINGS (SUP RA), WE AGREE THAT THE VERY BASIS OF ADDITIONS FOR WHICH THIS PENALTY HAS BEEN LEVIED HAS BEEN DELETED AND ACCORDINGLY THE LEVY OF PENALTY DOES NOT SURVIVE. HENCE, IN VI EW OF ABOVE, WE UPHOLD THE ORDER OF LD. CIT(A) IN CANCELLING THE PENALTY LEVIED U/S 2 71(1)( C ) OF THE ACT BY DISMISSING THE GROUND OF APPEAL TAKEN BY DEPARTMENT. I.T.A. NO.3589/MUM/2012 4 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 27 TH DECEMBER, 2013 , 1 2 27 TH DECEMBER, 2013 , SD SD ( / SANJAY ARORA) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 27TH DAY OF DECEMBER, 2013 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. ( / THE APPELLANT 2. ) ( / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- CONCERNED 4. 6 / CIT CONCERNED 5. 7 )9 , . 9 , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) . 9 , /ITAT, MUMBAI