DY CIT CIR-1, V. KRUNAL P. GALA,

ITA 3616/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1574 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 31-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 23-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Keywords: Opportunity of being heard
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R.K. PANDA, AM & SMT. ASHA VIJAYARAGHAV AN, JM I.T.A. NO. 3616/MUM/2008 (ASSESSMENT YEAR 2004-05) DY. CIT, CIR-1, THANE VARDAAN BUILDING, LOWER GROUND FLOOR, MIDC, WAGLE ESTATE, THANE VS. SHRI KRUNAL P. GALA PROP. OF HEMAL BUILDERS, GROUND FLOOR, NORITA A WING, PRIDE PARK, GHODBUNDER ROAD, THANE PAN: AGPPG2012M APPELLANT RESPONDENT APPELLANT BY: MR. KESHAVE SAXENA RESPONDENT BY: MR. SUBODH L. RATNAPARKHI O R D E R DATE OF HEARING: 31.05.2010 DATE OF ORDER: 04.06.2010 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 7 TH FEBRUARY, 2008 OF THE CIT(A)-II, THANE, RELATING T O ASSESSMENT YEAR 2004-05. 4. THE REVENUE HAS CHALLENGED THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE OF RS.53,30,500 MADE BY THE ASSESSING OFFICER U/S. 80- IB(10) OF THE INCOME-TAX ACT, 1961. 5. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A BUILDER AND DEVELOPER AND DOING CONSTRUCTION ACTIVITIES IN THE NAME OF PROPRIETARY CONCERN VIZ., HEMAL BUILDERS. DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE HAS SHOWN CONSTRUCTION OF BUILDING ON SURV EY NO. 23, HISSA NO. 3, GUT NO. 18. THE PROJECT IS SHOWN AT PRIDE PARK. FOR THE FINANCIAL YEAR 2003-04, THE ASSESSEE HAS SHOWN TOTAL TURNOVER AMOU NTING TO RS.4,56,04,025 AND NET PROFIT OF RS.50,30,503 AND C LAIMED THE ENTIRE PROFIT AS EXEMPT U/S. 80IB(10) OF THE ACT. DURING THE COU RSE OF ASSESSMENT I.T.A. NO. 3616/MUM/2008 SHRI KRUNAL P. GALA ================== 2 PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSE E TO SUBSTANTIATE SUCH CLAIM SINCE AS PER THE COPY OF THE APPROVED PLAN IT IS NOTICED THAT THE PROJECT CONSISTS OF BOTH RESIDENTIAL AND COMMERCIAL UNITS. IN RESPONSE TO THE SAME IT WAS EXPLAINED BY THE ASSESSEE THAT HE H AS ACQUIRED PLOTS OF LAND UNDER DIVERSE AGREEMENTS ADMEASURING ABOUT 917 6 SQUARE METRES CONTIGUOUS TO EACH OTHER. SUCH PLOT HAS BEEN NOTIO NALLY DIVIDED INTO TWO PARTS FOR DEVELOPING OF TWO INDEPENDENT PROJECTS VI Z., PROJECT PRIDE PLAZA AND PROJECT PRIDE PARK. PROJECT PRIDE PLAZA CONSIS TS OF DEVELOPMENT OF ONE INDEPENDENT G+2 UPPER FLOORS, COMMERCIAL BUILDI NG AS PER SANCTIONED PLAN. CONSTRUCTION COMMENCED IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004-05 AND WAS COMPLETED IN THE SA ME YEAR. INCOME FROM THE SAID PROJECT AT RS.27,15,588 WAS OFFERED T O TAX IN A.Y. 2003-04. SIMILARLY, THE PROJECT PRIDE PARK CONSISTS ONLY RES IDENTIAL UNITS. CONSTRUCTION WAS COMMENCED ON 23 RD JANUARY, 2003 AND THE FIRST BUILDING WAS COMPLETED ON 12 TH FEBRUARY, 2004. INCOME FROM THE BUILDING COMPLETED BY 31 ST MARCH, 2004 WAS OFFERED TO TAX IN A.Y. 2004-05. SUBSEQUENT BUILDINGS ARE STILL UNDER CONSTRUCTION. IT WAS FURTHER SUBMITTED THAT PROJECT PRIDE PLAZA IS DIFFERENT FRO M PROJECT PRIDE PARK. BOTH ARE SEPARATE, INDEPENDENT AND DISTINCT PROJECT S EVEN THOUGH COVERED UNDER ONE SANCTIONED PLAN OF THE MUNICIPAL CORPORATION OF THANE. THE ACCOUNTS OF BOTH THE PROJECTS ARE SEPAR ATELY MAINTAINED THEREBY IDENTIFYING THE EXACT COMPONENT OF PROFIT O F EACH PROJECT. THE AGREEMENT FOR SALE OF PREMISES IN RESPECT OF BOTH T HE PROJECTS IDENTIFYING THE EXACT PROJECT TO WHICH THE AGREEMENT PERTAINS T O WERE FURNISHED BEFORE THE ASSESSING OFFICER AND IT WAS SUBMITTED T HAT THE UNIT HOLDERS OF THE PROJECT PRIDE PLAZA DO NOT HAVE ACCESS TO THE C OMMON AMENITIES LIKE CLUB HOUSE, ETC., TO BE DEVELOPED IN THE PROJECT PR IDE PARK. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE FULFILS ALL THE CONDITI ONS PRESCRIBED U/S. 80IB(10) OF THE ACT AND THE AMOUNT HAS BEEN CORRECT LY CLAIMED AS EXEMPT. 6. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE C ONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HOUSING PR OJECT WAS NOT A HOUSING PROJECT SINCE IT CONTAINS CERTAIN COMMERCIA L UNITS AS PART OF THE I.T.A. NO. 3616/MUM/2008 SHRI KRUNAL P. GALA ================== 3 PROJECT. THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80IB (10) OF THE ACT. DISTINGUISHING THE DECISION OF T HE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. LAUKIK DEVELOPERS VS. DCIT VIDE I.T.A. NO. 532/MUM/06 RELIED ON BY THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND MADE ADDITION OF RS.5 3,30,503. 7. IN APPEAL, THE LEARNED CIT(A) DELETED THE ADDITION. WHILE DOING SO HE HELD THAT THE PROJECT PRIDE PARK COMPLETED DURIN G THE RELEVANT ASSESSMENT YEAR DOES NOT CONTAIN ANY COMMERCIAL COM PONENT. FURTHER THE DEVELOPMENT OF BOTH PRIDE PLAZA AS WELL AS PRID E PARK HAVE BEEN IDENTIFIED BY THE LOCAL AUTHORITIES I.E., THANE MUN ICIPAL CORPORATION BEING A HOUSING PROJECT AS PER THEIR CERTIFICATE DATED 10 TH JANUARY, 2007. RELYING ON NOTIFICATION NO. 2005/3/2001/ITA/II DATED 4 TH MAY, 2001 AND A NUMBER OF DECISIONS OF THE TRIBUNAL, HE HELD THAT T HE PROFIT RECEIVED FROM THE ASSESSEES HOUSING PROJECT PRIDE PARK IS ENTITL ED TO EXEMPTION U/S. 80IB(10)(C) OF THE ACT. HE ACCORDINGLY DIRECTED TH E ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. AGGRIEVED WITH SU CH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 8. THE LEARNED DR STRONGLY CHALLENGED THE ORDER OF THE CIT(A). REFERRING TO PAGE 22 OF THE ORDER OF THE CIT(A), HE SUBMITTED THAT THE LEARNED CIT(A) HAS NOT GIVEN ANY INDEPENDENT FINDIN G AND HAS SIMPLY ACCEPTED WHATEVER THE ASSESSEE HAS SUBMITTED BEFORE HIM. HE HAS NOT GIVEN ANY INDEPENDENT FINDING AS TO WHETHER OR NOT THE ASSESSEE HAS OFFERED TO TAX THE PROFIT FROM SUCH COMMERCIAL AREA IN THE HOUSING PROJECT. HE SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH OF THE T RIBUNAL IN THE CASE OF BRAHMA ASSOCIATES REPORTED IN 119 ITD 255. 9. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE PROJECT PRIDE PLAZA CONTAINING I.T.A. NO. 3616/MUM/2008 SHRI KRUNAL P. GALA ================== 4 COMMERCIAL COMPONENTS IS A SEPARATE AND DISTINCT PR OJECT AND IT IS SEGREGATED FROM THE PROJECT PRIDE PARK BY A COMPOUN D WALL AND THERE ARE ALSO A SERIES OF RESTRICTIONS ON THE ADJOINING PRID E PARK COMPLEX. FURTHER DEVELOPMENT OF BOTH THE PROJECTS HAS BEEN IDENTIFIE D BY THE LOCAL AUTHORITIES BEING A HOUSING PROJECT. SINCE THE ASS ESSEE FULFILS ALL THE CONDITIONS AS PRESCRIBED U/S. 80IB(10) AND FULFILS THE PARAMETERS LAID DOWN IN THE DECISION OF THE SPECIAL BENCH OF THE TR IBUNAL IN THE CASE OF BRAHMA ASSOCIATES (SUPRA), THEREFORE, THE MATTER NE ED NOT BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER AND THE O RDER OF THE CIT(A) SHOULD BE UPHELD. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. ADMITTEDLY T HE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) WAS NOT AVAILABLE AT THE TIME OF PASSING OF THE ASS ESSMENT ORDER BY THE ASSESSING OFFICER OR THE APPEAL ORDER BY THE CIT(A) . WE, THEREFORE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE TH E ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE SPECIAL BENCH OF THE T RIBUNAL IN THE CASE OF BRAHMA ASSOCIATES AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE H OLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 4 TH JUNE, 2010. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 4 TH JUNE, 2010 I.T.A. NO. 3616/MUM/2008 SHRI KRUNAL P. GALA ================== 5 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-II, THANE, (4) THE CIT-I, THANE, (5) THE DR, H BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO