VIDHI BUILDERS, THANE V. DCIT 6(1), THANE

ITA 369/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2367 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 14-01-2015
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ./ ITA NO. 369 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 05 - 20 06 M/S VIDHI BUILDER S, C - 3/11, NARMADA LOKRAM, KALYAN (EAST) - 421301, KALYAN VS. DCIT - 6(1), THANE ./ ./ PAN/GIR NO. : A A EFV 6246 P ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI JITENDRA SINGH /REVENUE BY : SHRI ABHISHEK SHARMA / DATE OF HEARING : 28/07/2016 / DATE OF PRONOUNCEMENT 29 / 07 /201 6 / O R D E R THIS IS AN APPEAL FILED B Y THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASS ESSMENT YEAR 20 05 - 2006 , IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.254 OF THE I.T.ACT. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR ADDITION OF RS.11,81,100/ - U/S.80IB(10) OF THE I.T.ACT. 3. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT IN TH E FIRST ROUND OF APPEAL, THE CIT(A) DELETED THE ADDITION OF RS.11,81,100/ - AFTER HAVING THE FOLLOWING OBSERVATIONS : - 5.3 GROUND OF APPEAL NO.3 THIS GROUND OF APPEAL RELATES TO THE ADDITION OF RS.11,81,800/ - ON ACCOUNT OF ADOPTION OF GP RATE AT 23.04% ON THE WIP OF AMRUT DHAM PROJECT. ON PERUSAL OF THE FACTS OF THIS CASE, I FIND THAT THE AO HAD COMPUTED THE NP OF THE PROJECT VIDHI COMPLEX @ 23.04%, AFTER MAKING DISALLOWANCE OF RS.19,58,399/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE IT ACT. BEFORE DISALLOWANCE U/S.40(A)(IA) AND BEFORE DEBIT OF INTEREST AND REMUNERATION TO THE PARTNERS IN THE ACCOUNTS OF THE PROJECT AMRUT DHAM, THE NET PROFIT OF AMRUT DHAM PROJECT WAS RS.7,16,218/ - WHICH WAS 10.34% OF THE WIP. THE NP OF VIDHI COMPLEX WAS RS.1 4,98,757/ - WHICH WAS 9.9% OF THE WIP OF RS.1,50,00,000/ - . THUS, THE APPELLANT HAD ITA NO. 369 /15 2 DISCLOSED ALMOST SIMILAR NET PROFIT FOR BOTH THE PROJECTS. THE APPELLANT HAD DEBITED THE INTER E ST AND REMUNERATION TO PARTNERS ONLY IN THE PROJECT CALLED AMRUT DHAM WHICH CAN BE SAID AS IRRATIONAL. THE APPELLANT SHOULD HAVE DEBITED THE INTEREST AND THE REMUNERATION PROPORTIONATELY TO BOTH THE PROJECTS. THE AOS ACTION IN TAKING THE NET PROFIT OF A MRUT DHAM PROJECT @23.04% WITHOUT BRINING ANY DEFECT IN THE BOOKS OF ACCOUNTS AND WITHOUT REJECTING THE BOOK RESULTS OF THE APPELLANT DOES NOT APPEAL TO BE LEGALLY SUSTAINABLE. THE AO HAS NOT GIVEN ANY REASON, LET APART, CONVINCING REASONS AND EVIDENCES, TO REJECT THE BOOK RESULTS AND TO ESTIMATE THE NET INCOME OF AMRUT DHAM PROJECT. A S SUCH, ACTION OF THE AO IS ERRONEOUS AND AGAINST THE ESTABLISHED LEGAL PRINCIPLES. THE APPELLANT HAS DISCLOSED ALMOST SIMILAR NET PROFITS IN BOTH THE PROJECTS BEFORE DEBIT OF INTEREST AND REMUNERATION TO PARTNERS AND BEFORE DISALLOWANCE MADE U/S.40(A)(IA) OF THE I.T.ACT. IN VIEW OF THE FACTS MENTIONED ABOVE, THE ADDITION OF RS.11,81,100/ - IS HEREBY DELETED. THE GROUND OF APPEAL NO.3, IS THEREFORE, ALLOWED. AGAINST THE ABOVE ORDER OF CIT(A), DATED 27 - 11 - 2008, THE REVENUE WAS NOT IN APPEAL, BUT THE ASSESSE E HAS FILED APPEAL BEFORE THE TRIBUNAL AGAINST REJECTION OF CLAIM OF DEDUCTION U/S.80IB AMOUNTING TO RS.34,57,156/ - . BY THE ORDER DATED 8 TH APRIL, 2011, THE TRIBUNAL HAVE ALLOWED THE APPEAL WITH THE FOLLOWING OBSERVATIONS : - 7. IN VIEW OF THE DECISION OF THE TRIBUNAL REFERRED ABOVE WE ARE OF THE VIEW THAT THE ORDER OF CIT(A) ON THIS ISSUE HAS TO BE REVERSED. WE DIRECT ACCORDINGLY. THE CIT(A) HAS ALSO MADE PASSIVE REMARK THAT THE PROJECT HAS NOT BEEN SANCTIONED BY THE KDMC. THIS IS NOT CORRECT AND THE REQUI RED APPROVAL HAD BEEN FILED BEFORE US AND HAD ALSO BEEN FILED BEFORE THE AO AND THE AO HAS ALSO MADE REFERENCE TO THE SAME IN HIS ORDER. WE THEREFORE, HOLD THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 10IB(1) OF THE ACT SUBJECT TO THE VER IFICATION OF THE EXISTENCE OF COMMERCIAL AREA IN THE PROJECT VIDHI COMPLEX. THE FACT THAT THE COMMERCIAL COMPLEX EXISTS IN THE AMURT DHAM PROJECT WOULD NOT BE RELEVANT FOR DENYING THE CLAIMING OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT FOR THE PROJECT VIDHI COMPLEX. WITH THE AFORESAID OBSERVATION WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AFTER VERIFYING THE COMMERCIAL AREA IN THE PROJECT VIDHI COMPLEX. FOR S TATISTICAL PURPOSES APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. 4. IN THE SET ASIDE PROCEEDINGS, THE AO HAS AGAINST MADE AN ADDITION OF RS. 11,81,100/ - . I DO NOT FIND ANY MERIT FOR THE ADDITION SO MADE BY THE ITA NO. 369 /15 3 AO, INSOFAR AS THIS ADDITION HAS ALREADY BEE N DELETED BY THE CIT(A) IN THE FIRST ROUND VIDE ORDER DATED 27 - 11 - 2008, AGAINST WHICH REVENUE DID NOT APPROACH TO THE TRIBUNAL. THUS, THE ORDER OF CIT(A) WAS REACHED TO THE FINALITY ON THE ISSUE OF ADDITION OF RS.11,81,100/ - . ACCORDINGLY, I DO NOT FIND ANY MERIT IN THE ORDERS OF LOWER AUTHORITIES AGAIN MAKING THE ADDITION , FOR WHICH NO DIRECTION WAS GIVEN BY THE TRIBUNAL. AS PER MY CONSIDERED VIEW IN THE SET ASIDE PROCEEDINGS, THE AO IS ONLY EMPOWERED TO DECIDE AFRESH AS PER THE DIRECTION OF THE TRIBUNAL. NOWHERE THE TRIBUNAL HAVE RESTORED THIS ISSUE BACK TO THE FILE OF AO, SINCE FOR THIS AMOUNT RELIEF WAS ALREADY GRANTED BY CIT(A), AGAINST WHICH THE REVENUE WAS NOT IN APPEAL BEFORE THE TRIBUNAL. IN VIEW OF THE ABOVE, THERE IS NO JUSTIFICATION IN THE ORDER PASSED BY LOWER AUTHORITIES FOR MAKING ADDITION OF RS.11,81,100/ - . 5 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 29 /07 / 201 6 . SD/ - ( R.C.SHARMA ) / ACCOUNTANT MEMBER MUMBAI ; DA TED 29 /07 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT . REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//