ITO, Ward 1(1), Aurangabad V. M/s. Sara Towers Pvt. Ltd., Aurangabad

ITA 375/PUN/2013

• Counselvise Citation: 37524514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANTO SH KUMAR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.375/PN/2013 (A.Y: 2008-09) ITO, WARD 1(1), AURANGABAD APPELLANT VS. M/S SARA TOWERS PVT. LTD., D-55, GAJANAN VAIBHAV COMPLEX, TOWN CENTRE, CIDCO, AURANGABAD. PAN: AAFCS1284G RESPONDENT APPELLANT BY : DR. SANTOSH KUMAR RESPONDENT BY : SHRI MANO J JAIN DATE OF HEARING: 24.06.2014 DATE OF ORDER : 27.06.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), [IN SHORT C IT(A)] AURANGABAD, DATED 07.12.2012 FOR A.Y. 2008-09 ON TH E FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN DELETING THE DISALLOWANCE OF RS.18,54,500/- MADE UNDER SECTION 40A(3). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) ERRED IN COMING TO THE CONCLUSION THAT THE DISALLOWANCE OF RS.18,54,400/- HAD THE EFFECT ON INCREASING ASSESSEES PROFIT FROM ITS HOUSING PROJE CT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) TO TH AT EXTENT. 2 ITA NO.375 OF 13 M/S. SARA TOWERS PVT. LTD 3. THE ORDER OF CIT(APPEALS) BE SET-ASIDE AND THAT OF AO BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND T HE ABOVE GROUNDS OF APPEAL. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF BUILDERS AND DEVELOPERS. THE ASSESSEE HAS FILED RE TURN OF INCOME DECLARING TOTAL INCOME AT 2,32,860/- AFTER CLAIMING DEDUCTION U/S.80IB(10) OF THE ACT AT 27,27,521/-. THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF THE ASSESSEE AT 28,92,910/-. THE ASSESSING OFFICER HAS MADE ADDITION OF 18,54,500/- ON ACCOUNT OF DISALLOWANCE U/S.40A(3), ADDITION OF 7,86,700/- ON ACCOUNT OF DISALLOWANCE OF INTEREST ON ACCOUNT OF INTEREST FREE ADVANCES GIVEN TO HINDUSTAN SAMUH AWAS LTD., KALANTRI SANJAY C. AND KERAJIWAL ANIL MADANGOPAL. THE ASSESSING OFFICER H AS ALSO MADE ADDITION OF 18,858/- ON ACCOUNT OF DELAY PAYMENT OF PROVIDENT FUND. THE ONLY ISSUE BEFORE US IS WITH REGARD TO A DDITION OF 18,54,500/- MADE ON ACCOUNT OF DISALLOWANCE U/S.40A (3) OF THE ACT. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE DISALL OWANCE HAD THE EFFECT ON INCREASING THE ASSESSEES PROFIT FROM ITS HOUSING PROJECT ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT TO THAT EXTENT. THE SAME HAS BEEN OPPOSED BEFORE US ON BEH ALF OF REVENUE, INTER ALIA, THE LEARNED DEPARTMENTAL REPRE SENTATIVE DR. SANTOSH KUMAR HAS SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE DISALLOWANCE OF 18,54,500/- HAD THE EFFECT ON INCREASING ASSESSEES PROFIT FROM ITS HOUSING PR OJECT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) TO THAT EXTENT. A CCORDINGLY, REQUESTED TO SET ASIDE THE ORDER OF CIT(A) AND THAT OF ASSESSING 3 ITA NO.375 OF 13 M/S. SARA TOWERS PVT. LTD OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNE D AUTHORIZED REPRESENTATIVE SHRI MANOJ JAIN HAS SUBMITTED THAT T HE ASSESSING OFFICER WAS NOT JUSTIFIED IN ALLOWING THE DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF ADDITION MADE U/S.40A(3) OF T HE ACT. HE FURTHER STATED THAT THE ASSESSING OFFICER WAS NOT J USTIFIED IN MAKING SEPARATE ADDITION OF U/S.40A(3) AT 18,54,500/- WITHOUT ALLOWING DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF THE SAID ADDITION. ACCORDINGLY, THE ORDER OF CIT(A ) BE UPHELD. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ISSUE BEFORE US IS THAT WH ETHER THE DISALLOWANCE OF 18,54,500/- HAD THE EFFECT ON INCREASING ASSESSEES PROFIT FROM ITS HOUSING PROJECT, WHICH I S ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT TO THAT EXTENT OR NOT. AS STATED ABOVE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF C ONSTRUCTION AND HAS CONSTRUCTED A HOUSING PROJECT WHICH IS ELIG IBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. SO, THE ELIGIBI LITY OF THE PROJECT IS NOT IN DISPUTE AND THE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF PROFIT OF THE SAID PROJECT CLAIMED BY THE ASSESSEE AS PER AUDITED FINAL STATEMENTS OF ACCOUNTS. THE ASSESSING OFFICER, HOW EVER, HAS MADE ADDITION OF 18,54,500/- ON ACCOUNT OF DISALLOWANCE U/S.40A(3) OF THE ACT AND HE HAS NOT ALLOWED DEDUCT ION U/S.80IB(10) OF THE ACT IN RESPECT OF THE ADDITION MADE U/S.40A(3) OF THE ACT TO THE BUSINESS INCOME OF THE ASSESSEE. THUS, THE ASSESSING OFFICER HAS MADE ADDITION BY WA Y OF DISALLOWANCE U/S.40A(3) OF THE ACT WHICH INCREASED THE INCOME OF THE ASSESSEE WHICH IS ELIGIBLE FOR DEDUCTION U/S.80 IB(10) OF THE ACT. ACCORDING TO US, THE ASSESSEE IS ALSO ELIGIBL E IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCO UNT. THIS VIEW IS FORTIFIED BY THE ITAT DECISION IN THE CASE OF MAHAVEER NAGARI SAHAKARI PATSANSTHA LTD. VS. DCIT (2002) 74 TTJ 793 4 ITA NO.375 OF 13 M/S. SARA TOWERS PVT. LTD (PUNE) AND THE SIMILAR VIEW HAS BEEN TAKEN BY ITAT, PUNE BENCH IN THE CASE OF DCIT VS. MAGARPATTA TOWNSHIP DEVELOP MENT & CONSTRUCTION CO. (2012) 150 TTJ 590 (PUNE). IN VIE W OF ABOVE FACTUAL AND LEGAL POSITION, THE CIT(A) WAS JUSTIFIE D IN COMING TO THE CONCLUSION THAT THE DISALLOWANCE OF 18,54,500/- HAD THE EFFECT ON INCREASING ASSESSEES PROFIT FROM ITS HOU SING PROJECT ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT TO T HAT EXTENT. WE UPHOLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 27 TH OF JUNE, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH JUNE, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), AURANGABAD 4) THE CIT, AURANGABAD 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE