PRATHAMESH CONSTRUCTION CO., MUMBAI V. ITO 17(3)(3), MUMBAI

ITA 3708/MUM/2010

• Counselvise Citation: 370819914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: H S NANDU
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER. ITA NO. 3708 /MUM / 10 (ASSESSMENT YEAR : 2006-07) M/S. PRATHAMESH CONSTRUCTION CO., A/203, K.K. TOWERS, G.D. AMBEDKAR ROAD, PAREL, MUMBAI-400 028 PAN AAFFPO783K VS. DY. COMMISSIONER OF INCOME TAX 5(2), MUMBAI. APPELLANT . RESPONDENT. APPELLANT BY : SHRI H.S. NANDU. RESPONDENT BY : SHRI G.P. TRIVEDI . DATE OF HEARING : 25 .0 7 .2011. DATE OF PRONOUNCEM ENT : 10.08.2011. O R D E R PER SHRI RAJENDRA SINGH : THIS APPEAL IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) DT.26.02.2010 FOR THE ASSESSMENT YEAR 200 6-07. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING DISALLOWAN CE OF CLAIM OF DEDUCTION U/S.80IB(10) OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF EXECUTION OF SLUM REHABILITATION PROJEC T. THE ASSESSEE FOR THE RELEVANT YEAR HAD EARNED PROFIT OF RS.1,94,55,619 FROM THE S AID PROJECT WHICH HAD BEEN CLAIMED AS EXEMPT U/S. 80IB(10). THE SAID PROVISION IS R EPRODUCED BELOW : ITA NO.3708/MUM/10 - 2 - THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTA KING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 3 RD DAY OF MARCH, 2007, BY A LOCAL AUTHORITY, SHALL BE HUNDRED PERCENT OF THE PR OFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT, IF; A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVE LOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998, AND COMPLETES SUCH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL, 2004, ON OR BEFORE THE 31 ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2004, WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJ ECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION FOR THE PURPOSE OF THIS CLAUSE :- (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF TH E HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY. (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; (B) THE PROJECT IS ON THE SIZE OF PLOT OF LAND WHI CH HAS MINIMUM ARE OF ONE ACRE; PROVIDED THE NOTHING CONTAINED IN CLAUSE (A) OR CLA USE(B) SHALL APPLY TO A HOUSING PROJECT CARRIED OUT IN ACCORDANCE WITH A SC HEME FRAMED BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR RECONS TRUCTION OR REDEVELOPMENT OF EXISTING BUILDING IN AREAS DECLARE D TO BE SLUM AREAS UNDER ANY LAW FOR THE TIME BEING IN FORCE AND SUCH SCHEME IS NOTIFIED BY THE BOARD IN THIS BEHALF; (C) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILT UP AR EA OF ONE THOUSAND SQUARE FEET WHERE SUCH RESIDENTIAL UNIT IS SITUATED WITHIN THE CITY OF DELHI OR MUMBAI OR WITHIN TWENTY FIVE KILOMETERS FROM THE MU NICIPAL LIMITS OF THESE CITIES AND ONE THOUSAND AND FIVE HUNDRED SQUARE FEE T AT ANY OTHER PLACE; AND (D) THE BUILT UP AREA OF THE SHOPS AND OTHER COMME RCIAL ESTABLISHMENTS INCLUDED IN THE HOUSING PROJECT DOES NOT EXCEED FIV E PERCENT OF THE AGGREGATE BUILT UP AREA OF THE HOUSING PROJECT OR T WO THOUSAND SQUARE FEET, WHICHEVER IS LESS; ITA NO.3708/MUM/10 - 3 - 3. THE ASSESSING OFFICER OBSERVED THAT THOUGH THE A SSESSEE HAD EXECUTED A PROJECT FOR RECONSTRUCTION OR REDEVELOPMENT OF SLUM REHABILITATION IN SLUM AREAS, THE PROJECT WAS NOT NOTIFIED BY THE BOARD AS REQUIRED I N TERMS OF PROVISO TO CLAUSE (B) OF SECTION 80IB(10). HE THEREFORE REJECTED THE CLAIM OF DEDUCTION AND ASSESSED TOTAL INCOME OF RS.1,94,66,220. 4. THE ASSESSEE DISPUTED THE ORDER OF THE ASSESSING OFFICER AND FILED APPEAL BEFORE THE CIT(A). IT WAS SUBMITTED BEFORE THE CI T(A) THAT THE PROJECT OF THE ASSESSEE WAS DULY APPROVED BY LOCAL AUTHORITY AS A HOUSING PROJECT AND THEREFORE THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S.80IB(10). THE CIT(A) OBSERVED THAT, IN HIS OPINION, THE DEDUCTION U/S.80IB(10) COULD BE ALLOWE D UNDER GENERAL PROVISIONS OF SECTION BUT SINCE THE ASSESSEE HAD CLAIMED DEDUCTION AS A S LUM DEVELOPMENT PROJECT, THE CLAIM COULD BE ALLOWED ONLY IF THE PROJECT WAS NOTIFIED B Y THE BOARD WHICH HAD NOT BEEN DONE IN THIS CASE. HE THEREFORE AGREED WITH THE ASSESSI NG OFFICER THAT THE DEDUCTION WAS NOT ALLOWABLE AND CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 5. BEFORE US, THE LEARNED A.R. SUBMITTED THAT THE P ROJECT HAS SINCE BEEN NOTIFIED BY THE BOARD VIDE NOTIFICATION NO.67/2010-INCOME TA X DT.3.8.2010, A COPY OF WHICH WAS PLACED ON RECORD. IT WAS SUBMITTED THAT THE ASS ESSEE HAD EXECUTED THE PROJECT ON THE BASIS OF ASSURANCE GIVEN BY THE FINANCE MINISTE R ON THE FLOOR OF THE PARLIAMENT REGARDING ALLOWABILITY OF DEDUCTION IN SUCH CASES A ND THEREFORE MERELY BECAUSE THERE WAS DELAY IN ISSUE OF NOTIFICATION, THE ASSESSEE CO ULD NOT BE DENIED THE BENEFIT OF ITA NO.3708/MUM/10 - 4 - DEDUCTION. IT WAS ARGUED THAT THE NOTIFICATION HAS TO BE GIVEN EFFECT WITH EFFECTIVE FROM 1.4.2004. HE ALSO REFERRED TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO VS. CIT (196 ITR 188) FOR THE P ROPOSITION THAT THE PROVISION IN A TAXING STATUTE SHOULD BE CONSTRUED LIBERALLY. IT W AS ALSO POINTED OUT THAT THE PROJECT OF THE ASSESSEE HAD BEEN APPROVED BY THE LOCAL AUTH ORITY AND THE AREA OF EACH FLAT WAS 700 SQ. FT. WHICH WAS WELL WITHIN THE LIMIT OF 10 00 SQ. FT. AND AREA OF COMMERCIAL TENEMENTS WAS 750 SQ. FT. WHICH WAS ALSO WITHIN THE LIMIT OF 5% OR 2000 SQ. FT. WHICH WAS LOWER AS PROVIDED UNDER THE SECTION. IT WAS T HUS PLEADED THAT THE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT WAS POINTED OU T THAT NOTIFICATION DT.3.8.2010 ISSUED BY CBDT CLEARLY STATED THAT THE NOTIFICATION SHALL COME INTO FORCE W.E.F. FROM THE DATE OF PUBLICATION. THEREFORE THE SAME COULD NOT BE APPLIED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS ACCORDINGLY PRAYE D THAT THE ORDER OF THE CIT(A) BE UPHELD. 7. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF DEDUCTION U/S.80IB(10) IN RESPECT OF SLUM REHABILITATION PROJECT EXECUTED BY THE ASSESSEE, WHICH WAS DULY AP PROVED BY LOCAL AUTHORITY. THE CLAIM OF DEDUCTION HAS BEEN DISALLOWED ON THE GROUN D THAT THE PROJECT HAD NOT BEEN NOTIFIED BY CBDT AS REQUIRED UNDER THE PROVISO TO C LAUSE (B) OF SECTION 80IB(10). THE NOTIFICATION HAS NOW BEEN ISSUED ON 3.8.2010 WHICH IS EFFECTIVE FROM THE DATE OF ITS ITA NO.3708/MUM/10 - 5 - PUBLICATION. IT IS THEREFORE REQUIRED TO BE EXAMI NED WHETHER THE SAID NOTIFICATION ISSUED ON 3.8.2010 WILL BE APPLICABLE TO THE IMPUGN ED ASSESSMENT YEAR 2006-07. IT IS ALSO TO BE NOTED THAT THE NOTIFICATION HAS EXCLUDE D THE SLUM DEVELOPMENT FALLING IN CATEGORY 7 MENTIONED IN THE NOTIFICATION NO.DPB-439 1/4080(A)/UD-11(RDP) DT.3.6.1992 AS WELL AS SLUM DEVELOPMENT FALLING WIT HIN CLAUSE 7.7 OF THE APPENDIX IV OF REGULATION 33(10). IT IS THEREFORE REQUIRED TO BE EXAMINED WHETHER THE PROJECT OF THE ASSESSEE WAS COVERED BY THE NOTIFICATION. SINCE TH E NOTIFICATION WAS NOT AVAILABLE AT THE TIME OF PASSING THE ORDER BY CIT(A), ALL THESE ASPECTS COULD NOT BE EXAMINED BY HIM. WE ALSO NOTE THAT THE CIT(A) IN HIS ORDER ME NTIONED THAT CLAIM COULD BE ALLOWED UNDER GENERAL PROVISIONS OF SECTION 80IB(10) BUT TH E CIT(A) GAVE NO FINDING WHETHER PROVISIONS OF CLAUSE (A) OR CLAUSE(B) OF SECTION 80 IB(10) WERE FULFILLED IN THE CASE OF ASSESSEE. NO FINDING WAS GIVEN BY THE CIT(A) WHETH ER THE PROJECT HAS BEEN EXECUTED ON A PLOT HAVING MINIMUM AREA OF ONE ACRE AND WHETH ER THE PROJECT HAD BEEN COMPLETED WITHIN THE TIME ALLOWED UNDER THE PROVISIONS. THE REFORE IT IS NOT UNDERSTOOD AS TO HOW THE CIT(A) CAME TO CONCLUSION THAT THE CLAIM COULD BE ALLOWED UNDER GENERAL PROVISIONS. IN CASE, THE CLAIM IS FOUND TO BE COVERED UNDER THE GENERAL PROVISIONS, IT COULD NOT BE DISALLOWED MERELY ON THE GROUND THAT THE CLAIM HAD BEEN MADE UNDER DIFFERENT PROVISION. IT HAS TO BE CONSIDERED UNDER ANY OF T HE PROVISIONS APPLICABLE TO THE FACTS OF THE CASE. IN OUR VIEW, THE ENTIRE MATTER REQUIR ES FRESH EXAMINATION BY CIT(A) INCLUDING THE APPLICABILITY OF NOTIFICATION FOR THE YEAR UNDER REFERENCE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RE STORE THE ISSUE TO THE FILE OF ITA NO.3708/MUM/10 - 6 - CIT(A) FOR PASSING A FRESH ORDER AFTER EXAMINING AL L THE ASPECTS IN THE LIGHT OF OUR OBSERVATIONS MENTIONED ABOVE AND AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10-08-2011. SD/- SD/- (D.MANMOHAN) (RAJENDRA SINGH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT.10-08-2011. *GPR TRUE COPY COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE, ITAT, MUMBAI. 6. GUARD FILE. BY ORDER DY./ASST.REGISTRAR, ITAT, MUMBAI