ITO WD 3(3), MUMBAI V. SHREE ASHAPURA CONSTRUCTION, KALYAN

ITA 370/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48810 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 02-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: V G GINDE
• Section: 143(3); 80IB; 10

Judgement Text

1 ITA NO.370/MUM/2010 ASSST. YEAR : 2006-07. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER. I.T.A. NO. 370/MUM/2010 ASSESSMENT YEAR : 2006-07. THE INCOME-TAX OFFICER, M /S SHREE ASHAPURA CONSTRUCTION, WARD-3(3), MUMBAI. VS. 303 DATTA KRIPA BHUVAN, TILAK ROAD, DOMBIVALI (EAST), MUMBAI. PAN AAOFS 8026 L APPELLANT. RESPONDENT. APPELLANT BY : SHRI D. SONGATE. RESPONDENT BY: SHRI V.G. GINDE. O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-I, THANE DATED 15-10-2009 WHEREBY HE D ELETED THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ASSESSEES CLAIM FOR D EDUCTION U/S 80IB(10). 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER. THE RETURN OF IN COME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31-10-2006 DECLARI NG TOTAL INCOME OF RS. NIL AFTER CLAIMING DEDUCTION OF RS.1,27,58,090/- U/S 80IB IN RESPECT OF THE ENTIRE NET PROFIT DERIVED FROM THE PROJECT, NAMELY, ASHA PARK. THE S AID PROJECT WAS DEVELOPED BY THE ASSESSEE AS A HOUSING PROJECT ON A PLOT OF LAND BEARING SURVEY NO. 59,H NO. 2 ITA NO.370/MUM/2010 ASSST. YEAR : 2006-07. 7A, G B, PATHARLI, PANDURANG WADI, DOMBIBVALI (EAST ) ADMEASURING 5080 SQ.MTS. THE TOTAL BUILT UP AREA OF THE PROJECT IS 1,06,702 SQ.FT. WHICH INCLUDED ESSENTIAL SHOPPING AREA AT GROUND LEVEL OF 5410 SQ.FT. THE PL AN OF THE SAID PROJECT WAS APPROVED IN THE YEAR 1999 BY THE DOMBIVALI KALYAN M UNICIPAL CORPORATION AND THE SAME CONSISTING OF SIX BUILDINGS WAS COMPLETED BY THE ASSESSEE IN TWO PHASES. IN THE FIRST PHASE, BUILDING NO. 1, 2 AND 3 CONSIST ING OF RESIDENTIAL FLATS AND ESSENTIAL SHOPPING AREA AT GROUND LEVEL OF 5410 SQ. FT. WAS COMPLETED IN THE YEAR 2003 AND PROFIT THEREOF WAS DISCLOSED IN THE RETURN FILED FOR ASSESSMENT YEAR 2003- 04 AND 2004-05. IN THE SECOND PHASE, BUILDING NO. 4 ,5 AND 6 CONSISTING OF ONLY RESIDENTIAL FLATS WAS COMPLETED IN THE YEAR 2005 AN D THE PROFIT THEREOF WAS DISCLOSED BY THE ASSESSEE IN THE RETURNS FILED FOR ASSESSMENT YEARS 2005-06 AND FOR THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2 006-07 CLAIMING THE SAME TO BE DEDUCTIBLE U/S 80IB(10). IN THE ASSESSMENT COMPLETE D IN THE YEAR UNDER CONSIDERATION U/S 143(3) VIDE AN ORDER DATED 11-12 -2008, THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB WAS DISALLOWED BY THE AO REL YING ON THE PROVISIONS OF CLAUSE (D) TO SUB-SECTION (10) OF SECTION 80IB INTR ODUCED BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01-04-2005 WHEREBY THE L EGISLATURE PUT A LIMIT ON THE COMMERCIAL AREA TO THE EXTENT OF 5% OF THE TOTAL BU ILT UP AREA OF THE PROJECT OR 2000 SQ.FT. WHICHEVER IS LESS. THE AO HELD AS FOLLOWS : THE FINANCE ACT (NO.2) 2004 HAS INTRODUCED CLAUSE (D) TO SUB SECTION 10 OF SEC. 80IB W.E.F. 01-04-2005 WITH A VIEW TO EX TEND THE BENEFIT OF 100% EXEMPTION OF TAX TO THOSE PROJECT WHICH INCLUDES CO MMERCIAL CONSTRUCTION OF 5% OF THE TOTAL BUILT UP AREA OF THE PROJECT LIMITE D TO A MAXIMUM OF 2000 SQ.FT. THUS THE INTENTION OF THE STATUTE IS VERY CL EAR THAT THE PROJECT HAVING COMMERCIAL AREA OF MORE THAN 5% IF THE TOTAL BUILT UP AREA OR 2000 SQ.FT. DO NOT QUALITY FOR DEDUCTION U/S 80IB(10). IT IS IMMA TERIAL WHETHER THE COMMERCIAL PREMISES WERE CONSTRUCTED BEFORE THE AME NDMENT DATE OR AFTER, AS THE DEDUCTION U/S 80IB(10) IS ALLOWABLE TO THE P ROJECT AS A WHOLE. AS THE PROJECT OF THE ASSESSEE INCLUDES COMMERCIAL AREA OF 5410 SQ.FT. WHICH IS 3 ITA NO.370/MUM/2010 ASSST. YEAR : 2006-07. MORE THAN THE MAXIMUM LIMIT ALLOWED, THE ASSESSEE D OES NOT QUALIFY FOR DEDUCTION U/S 80IB(10) OF RS.1,27,58,090/- FOR AY 2 006-07. FURTHER ON THE SAME GROUND THE 80IB EXEMPTION FOR A.Y. 05-06 WAS D ISALLOWED BY THE A.O. AND THE ASSESSEE WAS IN APPEAL BEFORE CIT(A), THANE AGAINST THE DISALLOWANCE, HOWEVER THE CIT(A)THANE HAS DISMISSED THE ASSESSEES APPEAL. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), A N APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) CHALLE NGING THEREIN THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ITS CLAIM FOR DEDUCTIO N U/S 80IB. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND PERUSING THE RELEVANT MATERIAL ON RECORD, THE LEARNED CIT(APPEALS) FOUND THAT THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE WAS SQUARELY COVERED BY THE DECISION O F THE TRIBUNAL IN THE CASE OF SAROJ SALES ORGANIZATION -VS- ITO (2008) 3 DTR (MUM BAI) 494 WHEREIN IT WAS HELD THAT THE PROVISIONS OF CLAUSE (D) INSERTED IN SECTION 80IB WITH EFFECT FROM 01- 04-2005 WOULD NOT BE APPLICABLE TO THE PROJECT APP ROVED PRIOR TO 01-04-2005. HE ALSO FOUND THAT THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE WAS COVERED EVEN BY THE DECISION OF SPECIAL BENCH OF ITAT IN THE CAS E OF BRAMHA ASSOCIATES 119 ITD 225 (PUNE) WHEREIN IT WAS HELD THAT A HOUSING P ROJECT APPROVED WITH A CONVENIENT SHOPPING AREA OF LESS THAN 10% SHALL NOT BE DISENTITLED TO THE BENEFITS AVAILABLE U/S 80IB(10). FOLLOWING THE SAID TWO DECI SIONS OF THE TRIBUNAL, THE LEARNED CIT(APPEALS) DIRECTED THE AO TO ALLOW THE C LAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB(10). AGGRIEVED BY THE ORDER OF T HE LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUN AL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE CLAIM O F THE ASSESSEE FOR DEDUCTION U/S 80IB IN RESPECT OF PROFIT DERIVED FROM HOUSING PROJ ECT, NAMELY, ASHA PARK WAS DISALLOWED BY THE AO FOR THE YEAR UNDER CONSIDERATI ON RELYING INTER ALIA, ON THE ASSESSMENT ORDER FOR ASSESSMEMT YEAR 2005-06 PASSED IN ASSESSEES OWN CASE 4 ITA NO.370/MUM/2010 ASSST. YEAR : 2006-07. WHEREIN THE CLAIM OF THE ASSESSEE FOR SIMILAR DEDUC TION IN RESPECT OF PROFIT DERIVED FROM THE SAME PROJECT WAS DISALLOWED. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US, THE APPE AL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 CHALLENGING THE DISALLOWANC E MADE U/S 80IB(10) HAS ALREADY BEEN DISPOSED OF BY THE TRIBUNAL VIDE ITS O RDER DATED 28 TH JANUARY, 2011 PASSED IN ITA NO. 179/MUM/2009 DECIDING THE SAID IS SUE IN FAVOUR OF THE ASSESSEE. A COPY OF THE SAID ORDER IS ALSO PLACED ON RECORD BEFORE US AND A PERUSAL OF THE SAME SHOWS THAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2005-06 FOLLOWING THE D ECISION OF ITS COORDINATE BENCH IN THE CASE OF SAROJ SALES ORGANIZATION (SUPRA) WHE REIN IT WAS HELD THAT THE RELEVANT PROVISIONS OF SECTION 80IB AS AMENDED W.E.F. 01-04- 2005 WOULD NOT BE APPLICABLE TO THE PROJECT APPROVED PRIOR TO 01-04-2005. AS TH E ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS THE MATERIAL FACTS R ELEVANT THERETO ARE ADMITTEDLY SIMILAR TO THAT OF ASSESSMENT YEAR 2005-06, WE RESP ECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR ASSESSME NT YEAR 2005-06 AND UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ALL OWING ASSESSEES CLAIM FOR DEDUCTION U/S 80IB. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 13 TH DAY OF MAY, 2011. SD/- SD/- (VIJAY PAL RAO) (P.M. JAGTAP ) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI, DATED: 13 TH MAY, 2011. WAKODE 5 ITA NO.370/MUM/2010 ASSST. YEAR : 2006-07. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, E-BENCH (TRUE COPY) BY ORDE R ASSTT. REGIST RAR, ITAT, MUMBAI BEN CHES