UNNATHI ESTATES, MUMBAI V. ITO 15(3)(1), MUMBAI

ITA 3599/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84267 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBE
• Section: 80IB

Judgement Text

, ,Q ,Q,Q ,Q INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH. , ! , BEFORE S/SH.VIJAY PAL RAO, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.3599/MUM/2013, ' ' ' ' # # # # / ASSESSMENT YEAR-2009-10 M/S UNNATHI ESTATE, A/5, SATNAM APARTMENTS, L.T. ROAD, MULUND (E), MUMBAI-400018 PAN:AABFU5037A VS ITO 15(3)(1), MUMBAI. ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : NONE + * / REVENUE BY : SHRI SACHCHIDANAND DUBE ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 28-10-2014 -.# + ), / DATE OF PRONOUNCEMENT : 28-11-2014 ' ' ' '1961 1961 1961 1961 + + + + 254 254 254 254( (( (1 11 1) )) ) )7) )7) )7) )7) 8 8 8 8 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DATED 01.03.2013 OF THE CIT(A )-26, MUMBAI,ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEALS: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF THE CLAIM OF THE ASS ESSEE FOR DEDUCTION U/S 80IB (10) OF INCOME TAX ACT, 1961 FOR RS. 48,20,493/-. 2)ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT THE CIRCULAR 1 OF 2011 DATED 6TH APRIL 2011 IS BINDING TO THE DEPARTMENT AND AS PER THE SAID CIRCULAR THE CONDITIONS PRESCRIBED UND ER SECTION 80IB (10) HAVE BEEN COMPLIED WITH. 3) ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT (A) ERRED IN HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH ALL THE CON DITIONS LAID DOWN UNDER SECTION 80IB(10) OF INCOME TAX ACT, 1961. 4) ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT (A) ERRED IN VIEW OF THE SEVERAL ITAT DECISIONS AND BOMBAY HIGH COURT DE CISIONS THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80IB (10) OF INCOME TAX ACT, 1961 IN RESPECT OF COMPLIANT PART OF THE PROJECT. 5) ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT (A) NOT APPRECIATING THAT THE INTERPRETATION OF THE LAW WILL CREATE DISC RIMINATION AGAINST ASSESSEE JUST BECAUSE HE FOLLOWS PERCENTAGE COMPLETION METHOD AND NOT THE PR OJECT COMPLETION METHOD. 6) ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT (A) ERRED IN HOLDING THAT AS PER THE PROVISIONS OF SECTION 80IB (10) OF INCOME TAX ACT, 1961 HE HAS TO EITHER ALLOW OR DISALLOW IN FULL THE CLAIM U/S 80IB OR DISALLOW IN FULL. HENCE, HE ERRED IN NOT GRANTING THE DEDUCTION U/S 80IB IN RESPECT OF THE COMPLIANT PART OF THE HOUSING PROJECT. 7) ALL THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXC LUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. 8) THE ASSESSEE PRAYS FOR LEAVE TO ADD, ALTER OR AM END ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE DATE OF HEARING. THE ASSESSEE-FIRM, ENGAGED IN THE BUSINESS OF DEVEL OPING AND BUILDING HOUSING PROJECTS,FILED ITS RETURN OF INCOME ON 30.9.2009 DECLARING TOTAL INCOM E AT NIL.ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.143(3)OF THE ACT ON 29.12.2011,DETE RMINING THE INCOME OF THE ASSESSEE AT RS.48, 20,495 /-. 2 ITA NO. 3599/M/2013 M/S UNNATHI ESTATE 2. EFFECTIVE GROUND OF APPEAL IS ABOUT THE CLAIM MADE BY THE ASSESSEE U/S.80IB(10)ACT, AMOUNTING TO RS.48,20,493/-.DURING THE ASSESSMENT PROCEEDINGS ,THE AO FOUND THAT IN THE P & L A/C. OF UNNATHI ESTATE IT HAD SHOWN SALES OF RS.1,82,98,97 2/-,THAT THE NET PROFIT WAS SHOWN AT RS. 45, 44,743/-,THAT THE SALES AS SHOWN IN THE P & L ACCOU NT WERE OF 'UNNATHI WOODS - PHASE- IV' WHICH WAS A COMPLETED PROJECT.THE ASSESSEE WAS ASKED TO E XPLAIN THE SAID DISCREPANCY. IT WAS STATED THAT THE PROJECT NAMED 'UNNATHI WOODS' CONSISTS OF FOUR PHASES NAMELY PHASE-I, PHASE-II, PHASE III & PHASE -IV,THAT DURING THE YEAR ONLY PHASE- IV HAD B EEN COMPLETED,THAT THE NET PROFIT OF RS.48, 20, 493(NP RS.4544743 + DEP.RS.127726 + DONATION RS.213 101 ASSESSEE RS.4,88.5570/(-) ALLOWABLE DEP. RS. 65077 ASSESSEE RS.4820493) WAS SET OFF AGA INST THE DEDUCTION U/S 80 IB(10).AS PER THE AO THE SIZE OF PLOT OF LAND OF THE ENTIRE PROJECT C ALLED 'UNNATHI WOOD' PHASE IV SHOWED TOTAL BUILT -UP AREA AT 12730 SQ.MTRS WHICH INCLUDED BUIL T UP AREA OF 417.50SQ.MTRS (SALEABLE)FOR SHOPS AND OTHER COMMERCIAL ESTABLISHMENT I.E.COMMERCIAL A REA CONSISTED OF APPX.4493 SQ.FT.THE ASSESSEE STATED THAT THE PROJECT 'UNNATHI WOODS' WA S SITUATED AT KAVESAR, THANE,THAT SAID PLACE WAS LESS THAN 25 KMS FROM THE MUNICIPAL LIMITS OF MUMBAI,THAT THE SAID PROJECT RECEIVED APPROVAL FROM T.M.C VIDE VP NO.2005/45/TMC/TDD2844 DATED 26/10/2005,THAT THE COMMENCE -MENT CERTIFICATE WAS RECEIVED VIDE VP NO.2005/45/T MC/TDD/493-DATED 24/10/ 2007, THAT THE OCCUPATION CERTIFICATES WAS RECEIVED VIDE VP.NO.200 5/45/TMC/TDD/546-DATED 28/03/2011. ON THE BASIS OF THE CHART SUBMITTED BY THE ASSESSEE DURING THE COURSE OF SCRUTINY ASSESSMENT,THE AO HELD THAT THE COMPLETED PHASE IV OF 'UNNATHI WOO DS' CONSISTED OF BUILDINGS D-1, D-2, D-3 & D-4 & E-1 TO E-6 BUILDING,THAT D-1 CONSISTED OF STI LT PLUS SEVEN FLOORS,THAT IT DID NOT CONSIST SHOPS,THAT D-2 TO D-4 CONSISTED OF GROUND PLUS SEVE N FLOORS AND 24 SHOPS E-1 TO E-6 CONSISTED OF STILT PLUS SEVEN FLOORS AND NO SHOPS,THAT THE TM C APPROVAL OF 'UNNATHI WOODS' WAS FOR THE BLDGS A, B, C, D, E1, E2 ,E3, E4, E5 AND E6 AND NOT FOR THE BUILDINGS D-1, D2, D-3 & D-4THAT THE UNNATHI PROJECT CONTAINED COMMERCIAL AREA IN EX CESS THE PERMISSIBLE LIMIT,THAT IT EXCEEDED FIVE PERCENT OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR 2000 SQ.FT., WHICHEVER WAS LESS AS PER THE PROVISIONS OF SECTION 80IB(10) OF T HE ACT FOR THE AY 2009-10,THAT THE ASSESSEE HAD NOT BROUGHT ON RECORD WHETHER THE MUNICIPAL APPROVA L WAS TAKEN FOR THE PROJECT AS 'WHOLE' OR PHASE BY PHASE.THE AO ISSUED A SHOW-CAUSE NOTICE,DA TED 21.12.2011,ASKING THE ASSESSEE AS TO WHY THE CLAIM OF DEDUCTION U/S.80IB (10) OF THE ACT SHOULD NOT BE REJECTED. IN RESPONSE TO THE SAID SHOW-CAUSE NOTICE,THE ASSES SEE REPLIED THAT AS PER THE FINAL APPROVAL THE TMC HAD APPROVED CONSTRUCTION OF 10 BUILDINGS,THAT THSSE BUILDINGS AS PER THE APPROVAL WERE A, B,C,D,E1,E2,E3,E4,E5 AND E6,THAT FOR SALE PURPOSES THE ASSESSEE HAD NAMED THOSE BUILDINGS AS D1,D2, D3,D4,E1.E2.E3.E4,E5 AND E6,THAT AS PER PLAN S SANCTIONED, THE COMMERCIAL AREA IN THE SAID PROJECT WAS 4493.97 SQ.FT WHICH WAS ADMITTEDL Y MORE THAN 2000 SQ. FT. WHICH IS THE MAXIMUM LIMIT OF A COMMERCIAL AREA PRESCRIBED BY TH E SECTION 80IB(10) UP TO THE AMENDMENT OF THE ACT BY THE FINANCE ACT, 2010,THAT THE BENEFIT M UST BE GRANTED IN RESPECT OF COMPLETED PART OF THE PROJECT . 3. THE AO,AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE,HELD THAT THE PROVISIONS OF SECTION 80IB(10) OF THE ACT WERE TO BE READ KEEPING IN VIEW THE TRUE INTENTION OF THE LEGISLATURE TO PROMOTE AFFORDABLE HOUSING FOR THE MASSES,THAT THE DEDUCTION U/S 80IB(10) OF THE ACT WAS ALLOWABLE TO AN UNDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY A LOCAL AUTHORITY,THAT TO BE ELIGIBLE TO CLAIM THE DEDUCTIO N U/S 80IB (10), ALL THE CONDITIONS LAID DOWN IN THE SECTION WERE REQUIRED TO BE FULFILLED,THAT IN C ASE ANYONE OR MORE OF THE CONDITIONS PRESCRIBED WERE NOT FULFILLED, THE PROJECT WOULD NOT BE ELIGIB LE FOR THE CLAIM OF SAID DEDUCTION,THAT CLAIMING DEDUCTION U/S.80IB(10) WITHOUT FULFILLING EACH AND EVERY CONDITION WOULD AMOUNT TO GET THE UNJUST ENRICHMENT AT THE COST OF THE EXCHEQUER WITHOUT FUL FILLING OBLIGATION TO ACHIEVE THE SOCIAL OBJECTIVES AS INTENDED BY THE LEGISLATURE,THAT THE PROJECTS, WHICH DID NOT FULFILL THE PRESCRIBED CONDITIONS,COULD NOT BE ALLOWED TO CLAIM THE DEDUCT ION U/S.80IB(10),THAT IN THE ASSESSEE'S CASE THE COMMERCIAL AREA WAS IN EXCESS OF 5% OF THE TOTAL BU ILT UP AREA,THAT THE ASSESSEE HAS CLAIMED 3 ITA NO. 3599/M/2013 M/S UNNATHI ESTATE PROPORTIONATE DEDUCTION,THAT THE CLAIM FOR PROPORTI ONATE DEDUCTION WAS NOT ALLOWABLE,THAT EITHER AN UNDERTAKING WAS ELIGIBLE FOR THE DEDUCTION OR IT WAS NOT,THAT THERE WAS NO MIDDLE WAY,THAT CIRCULAR 1/2011(F.NO.142/1(2011-S0(TPL) DATED 6.4.2 011 WAS APPLICABLE FROM THE AY 2010- 11.FINLLY,HE REJECTED THE CLAIM OF THE ASSESSEE MAD E U/S.80IB (10)OF THE ACT,AMOUNTING TO RS.48.20 LAKHS. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).AFTER CONSIDERING THE FINDINGS OF T HE AO IN THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE ASSESSEE AND THE CBDT CIRCULAR N O. 1 OF 2011,HE HELD THAT THE AMENDMENTS TO SEC.80IB(10) OF THE ACT WERE APPLICABLE WITH EFFECT FROM 1.4.2010 I.E. W.E.F. A.Y.2010-11 ONWARDS,THAT FOR A.Y.2009-10 BENEFIT OF THE AMENDME NTS WERE NOT BE AVAILABLE TO THE ASSESSEE,THAT THE CONDITIONS OF MAXIMUM LIMIT OF CO MMERCIAL AREA OF 5% OF AGGREGATE BUILT UP AREA OR 2000 SQ.FT. WHICHEVER WAS LESS HAD BEEN VIO LATED BY THE ASSESSEE,THAT THE TAXATION POLICY WAS CHANGED FROM YEAR TO YEAR TO ACHIEVE CERTAIN OB JECTIVES,THAT IN THE INSTANT CASE THE ASSESSEE COULD NOT CLAIM THAT SUCH BENEFIT SHOULD BE GIVEN E VEN IN EARLIER PERIOD,THAT THE ALTERNATIVE CLAIM MADE BY THE ASSESSEE FOR PROPORTIONATE DEDUCTION ON THE RESIDENTIAL PORTION OF THE PROJECT WAS NOT AVAILABLE,THAT ISSUE BEFORE HIM WAS ALLOWABILITY OF THE CLAIM WHERE COMMERCIAL AREA HAD EXCEEDED THE MAXIMUM LIMIT,THAT THE AO HAD CORRECTLY DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE. 5. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA.WE HAVE PERUSED THE MATERIAL.UNDISPUTED FACT OF THE CASE ARE THAT T HE ASSESSEE IS A BUILDER AND DEVELOPER OF HOUSING PROJECT,THAT IT IS FOLLOWING PERCENT COMPLETION MET HOD OF ACCOUNTING,THAT DURING THE YEAR UNDER CONSIDERATION IT HAD CLAIMED DEDUCTION U/S.80IB OF THE ACT,THAT THE AO DISALLOWED THE CLAIM AS HE WAS OF THE OPINION THAT THE COMMERCIAL AREA WAS MOR E THAN THE ALLOWABLE AREA.WE FIND THAT THE BASIC ISSUE IS WHETHER THE BENEFIT OF CIRCULAR NO.1 OF 2011,ISSUED BY THE CBDT,IS AVAILABLE TO THE ASSESSEE OR NOT.WE FIND THAT BY THE CIRCULAR CERTAI N CONCESSIONS WERE GRANTED TO THE PROJECTS APPROVED BEFORE 31.03.2008.AS PER THE CIRCULAR THE PROJECT HAD TO BE COMPLETED WITHIN FIVE YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PRO JECT HAD BEEN APPROVED BY LOCAL AUTHORITY.IN THE CASE UNDER CONSIDERATION THE PROJECT WAS APPROVED O N 26.10.2005 AND THE LOCAL AUTHORITIES HAD ISSUED OCCUPATION CERTIFICATE ON 28.03.2011.THE COM MERCIAL BUILT UP AREA WAS LESS THAN 3% OR 5000 SQUARE FEET WHICHEVER IS MORE.IT IS A KNOWN FA CT THAT SECTION 80IB OF THE ACT AND SIMILAR SECTIONS WERE INTRODUCED WITH A SPECIFIC PURPOSE I. E. TO GIVE INCENTIVE TO THE DEVELOPERS TO BUILD AFFORDABLE HOUSES FOR MIDDLE CLASS.PROVISIONS OF SE CTION 80IB WERE AMENDED FROM TIME TO TIME AND RELAXATION WERE GIVEN TO KEEP THE MOMENTUM OF C ONSTRUCTION OF AFFORDABLE HOUSING UNITS.CIRCULAR NO.1 OF 2011 WAS ONE OF THE SUCH STE PS.IN OUR OPINION,BENEFIT GIVEN BY THE CIRCULAR IS AVAILABLE TO THE ASSESSEE FOR THE YEAR UNDER CON SIDERATION AS THE COMMERCIAL AREA IS NOT MORE THAN THE MAXIMUM LIMIT PRESCRIBED BY IT.CONSIDERING THE PECULIAR CIRCUMSTANCES OF THE CASE AND THE FACTS THAT SECTION 80IB OF THE ACT IS PART OF B ENEVOLENT LEGISLATION AND THE ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD, WE ARE OF THE OPINION THAT CLAIM MADE BY THE ASSESSEE U/S.80 IB OF THE ACT SHOULD HAVE BEEN ALLOWED. THEREFORE,WE DECI DE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ( 9 '() + : + ) ;<. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH NOVEMBER,2014 . 8 + -.# > ?' 28 UOE UOEUOE UOECJ CJCJ CJ , 201 4 . + 7 @ SD/- SD/- ( / VIJAY PAL RAO) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER , / MUMBAI, ?' /DATE: 28.11 . 2014. 4 ITA NO. 3599/M/2013 M/S UNNATHI ESTATE SK 8 8 8 8 + ++ + &) &) &) &) A #) A #) A #) A #) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ B C , 4. THE CONCERNED CIT / B C 5. DR F BENCH, ITAT, MUMBAI / D7 &)' ,Q ,Q,Q ,Q , . . . 6. GUARD FILE/ 7 E ' ' ' ') )) ) &) &)&) &) //TRUE COPY// 8' / BY ORDER, F / ; DY./ASST. REGISTRAR , /ITAT, MUMBAI