The Asstt. Commissioner of Income Tax, Chandigarh V. M/s Mountview Group Housing Co., Manimajra

ITA 38/CHANDI/2013

• Counselvise Citation: 3821514 RSA 2013
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Competent authority
• Section: 80IB; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.38/CHD/2013 ASSESSMENT YEAR:2009-10 THE ACIT. VS. M/S MOUNTVIEW GROUP HOUSING CO. CIRCLE 3 (1) SCF 270 CHANDIGARH MOTOR MARKET MANIMAJRA PAN NO. AAMFM3623R (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K. MITTAL RESPONDENT BY : SH. PARIKSHIT AGGARWAL DATE OF HEARING : 09/09/2015 DATE OF PRONOUNCEMENT :14/10/2015 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) CHANDIGARH DT. 15/10/2012. 2. THE ONLY ISSUE IN THE PRESENT APPEAL IS RELATING TO THE ELIGIBILITY OF DEDUCTION U/S 80-IB OF THE INCOME TAX ACT 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT W AS GRANTED PERMISSION BY TOWN AND COUNTRY PLANNING DEPARTMENT, HIMACHAL PRAD ESH FOR HOUSING PROJECT COMPRISING OF FOUR BLOCKS AS UNDER: S.NO. BLOCK NO. OF FLATS APPROVED 1 A 96 2 B 96 3 B-1 32 4 C 80 TOTAL 304 2 SUBSEQUENTLY, THE ASSESSEE CONDUCTED A MARKET SURVE Y AND DROPPED THE IDEA OF DEVELOPMENT OF A & C BLOCKS AND INITIATED THE CO NSTRUCTION OF B & B1 BLOCKS ONLY WHICH WAS COMPLETED WITH IN THE PRESCRIBED TIM E LIMIT OF FOUR YEAR FROM THE DATE OF RECEIPT OF APPROVAL. THUS OUT OF 304 BLOCKS APPROVED, ONLY 128 FLATS WERE CONSTRUCTED. THE ASSESSEE SUBMITTED COMPLETION CERT IFICATE OF THE SAME. THE NET PROFIT FROM THE ACTIVITY WAS OF RS. 2,37,05,955 /- WHICH WAS CLAIMED AS EXEMPT U/S 80-IB OF THE ACT. THE AO DENIED THE CLAIM OF TH E ASSESSEE FOR THE REASONS THAT THE WHOLE OF THE PROJECT FOR WHICH PERMISSION HAD B EEN GRANTED WAS REQUIRED TO BE COMPLETED WITH IN THE SPECIFIED TIME LIMIT OF FO UR YEARS AND SINCE THE ASSESSEE HAD NOT INITIATED / COMPLETED THE ENTIRE P ROJECT IT WAS NOT ELIGIBLE FOR DEDUCTION U/S 80-IB(10) OF THE ACT IN VIEW OF THE I NSTRUCTION NO. 4/2009 DT. 30/06/2009 ISSUED BY THE CBDT. 4. BEFORE THE LD. CIT(A) THE ASSESSEE PLEADED THAT DEDUCTION U/S 80IB(10)CANNOT BE DISALLOWED FOR NOT COMPLETING THE ENTIRE PROJECT WITHIN 4 YEARS. THE ASSESSEE STATED THAT PROFITS PERTAINING TO THE COMPLETED PORTION OF THE PROJECT ARE ELIGIBLE FOR DEDUCTION U/S 80 IB (10). THE ASSESSEE PLACED RELIANCE ON A NUMBER OF JUDGMENTS IN SUPPORT OF ITS CONTENTION OF PROPORTIONATE DEDUCTION U/S 80IB(10). FURTHER THE ASSESSEE PLEADED THAT EACH BLOCK IN THE PROJECT WAS A SEPARATE HOUSING PROJECT IN ITSELF AND THEREFORE PROFITS VIS --VIS THE COMPLETED BLOCKS ARE ELIGIBLE FOR DEDUCTION U/S 80IB(10). THE ASSESSEE P LACED RELIANCE UPON THE FOLLOWING DECISIONS IN SUPPORT OF ITS ABOVE CONTENT ION. I. MUDHIT MADAN LAL GUPTA VS. ACIT (2011)51DTR217(M UM.) II. SAROJ SALES ORGANISATION VS. ITO (2008) 3 DTR 4 94 (MUM.) III. BENGAL AMBUJA HOUSING DEVELOPMENT LTD. VS. DCI T ITA NO. 1595/KOL/2005 DTD. 24/03/2006 IV. VANANA PROPERTIES VS. ACIT (2009) 27 DTR 282 (M UM.) V. CIT VS. BRAHMA ASSOCIATES (2011) 333 ITR 289 (BO M.) 3 THE ASSESSEE ALSO STATED THAT THE PROJECT WAS DULY APPROVED BY THE COMPETENT LOCAL AUTHORITY WHICH HAD BEEN ACCEPTED BY THE REVE NUE. THE SAME COMPETENT AUTHORITY HAD GRANTED COMPLETION TO TWO B LOCKS AND THUS ACCEPTED THE SAID BLOCKS TO BE A HOUSING PROJECT. THEREFORE ALSO THE ASSESSEE WAS ENTITLED TO CLAIM BENEFIT OF SECTION 80IB(10). THE ASSESSEE FURTHER PLACED RELIANCE UPON THE DECIS ION OF HONBLE MUMBAI ITAT IN THE CASE OF VIDHI BUILDERS VS. ITO ITA 2554/MUM/ 2011 DT. 31/01/2012, WHERE IN IT WAS HELD THAT THE ASSESSEE WOULD BE ENTITLED TO CLA IM DEDUCTION FOR FLATS COMPLETED WITH IN THE SPECIFIED TIME PERIOD. THE ASSESSEE FURTHER PLEADED THAT THE PROVISION GRA NTING RELIEF IN SECTION 80-IB(10) HAD TO BE LIBERALLY CONSTRUED AS HELD BY THE APEX C OURT IN CIT VS. BAJAJ TEMPO LTD. (1992) 196 ITR 188 (SC) AND CIT VS. BABY MARIN E PRODUCTS (2007) 290 ITR 323 (SC) THE ASSESSEE FURTHER PLACED RELIANCE ON THE DECISIO N WHICH SPECIFICALLY DEALT WITH THE ASPECT OF LIBERAL INTERPRETATION OF PROVIS IONS OF SECTION 80IB(10) IN CASE OF DCIT VS. BRIGADE ENTERPRISES (2008) 14 DTR 371 ( BANG) AND IN CASE OF B.K.PATE ENTERPRISES VS. DCIT (2009) 28 DTR 451 (PUNE). 5. THE LD. CIT(A)ON CONSIDERATION OF THE SUBMISSION S OF THE ASSESSEE ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING AT PARA 3.3 TO 3.3.5. 3.3. I HAVE CONSIDERED THE SUBMISSION OF THE LD. LD. COUNSEL FOR THE ASSESSEE. THE APPELLANT WAS GIVEN APPROVAL FOR CONSTRUCTION O F FOUR BLOCKS COMPRISING OF 304 FLATS. THE APPELLANT DID NOT START WORK ON TWO BLOCKS NAMELY A & C AND CONSTRUCTED 128 FLATS OF B & B1 BLOCKS WITHIN TIME LIMIT PRESCRIBED IN SECTION 80- IB(10) OF THE ACT. THE APPELLANT CLAIMED DEDUCTION U/S 80IB OF THE ACT ON THE PROFITS OF THE CONSTRUCTION OF THE FLATS OF THESE B LOCKS, WHICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ENT IRE PROJECT WAS NOT COMPLETED. 3.3.1 IN THE CASE OF THE APPELLANT, THERE IS NO DIS PUTE THAT TWO BLOCKS HAD BEEN COMPLETED FOR WHICH SUFFICIENT EVIDENCE WAS PRODUCE D BY THE APPELLANT. THE APPELLANT HAS CLAIMED DEDUCTION U/S 80IB(10) IN RES PECT OF PROFITS OF 104 FLATS OF THE BLOCKS B & B1 ONLY. AS PER THE ASSESSING OFFICE R, THE APPELLANT HAS FAILED TO COMPLETE THE PROJECT, BUT THE VIEW TAKEN BY THE ASS ESSING OFFICER IS NOT CORRECT AS DISCUSSED IN THE SUCCEEDING PARAGRAPHS. 3.3.2 THE TERM HOUSING PROJECT HAS NOT BEEN DEFIN ED IN THE ACT. THE ISSUE CAME UP PROBABLY FOR THE FIRST TIME BEFORE HONBLE ITAT, MUMBAI AND IT HAD HELD IN THE CASE OF SAROJ SALES ORGANIZATION (3DTR 494) THAT AS THERE IS NO DEFINITION OF THE TERM HOUSING PROJECT IN SECTION 80-IB(10), DEFINI TION GIVEN IN SECTION 80HHBA WILL BE OF INTERNAL AID TO DECIDE WHETHER HOUSING PROJEC T MEANS THE PROJECT OF THE 4 GROUP OF BUILDINGS OR WHETHER IT CAN BE THE PROJECT OF A SINGLE BUILDING. ACCORDING TO THE TRIBUNAL, IF THE LEGISLATURE WAS DESIRING TO DEFINE NATURE OF THE HOUSING PROJECT FOR THE PURPOSE OF SECTION 80-IB(10), THEN EITHER THE SPECIFIC DEFINITION WOULD HAVE BEEN INCORPORATED IN THE ACT OR IT WOULD HAVE BEEN EXPLAINED BY WAY OF EXPLANATION TO SECTION 80IB OF THE ACT. 3.3.3. IT WAS HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF MUDHIT MADAN GUPTA (51 DTR 217) THAT LEGISLATURE HAD NOT PROVIDE D ANY DEFINITION OF THE HOUSING PROJECT AND SO THE DEFINITION HAS TO BE CONSTRUED B Y MAKING REFERENCE TO DICTIONARY AND AS LONG AS SEGREGATED BLOCKS ARE ELI GIBLE FOR DEDUCTION U/S 80IB(10), THE SAME SHALL BE CONSTRUED AS ELIGIBLE H OUSING PROJECT AND DEDUCTION HAS TO BE ALLOWED ACCORDINGLY. IT WAS HELD BY HONB LE KOLKATA ITAT IN ITS JUDGMENT DATED 24/038/2006 IN THE CASE OF M/S BENGAL AMBUJA HOUSING DEVELOPMENT LTD. IN ITA NO. 1595/KOL/2005. 22. IT IS APPARENT FROM THE PERUSAL OF S. 80-IB(1 0) THAT THE SECTION HAS BEEN ENACTED WITH A VIEW TO PROVIDE INCENTIVE FOR BUSINE SSMAN TO UNDERTAKE CONSTRUCTION OF RESIDENTIAL ACCOMMODATION FOR SMALL ER RESIDENTIAL UNITS AND THE DEDUCTION IS INTENDED TO BE RESTRICTED TO THE PROFI T DERIVED FROM THE CONSTRUCTION OF SMALLER UNITS AND NOT FROM LARGER RESIDENTIAL UN ITS. THOUGH THE AO HAS DENIED THE CLAIM OF THE ASSESSEE OBSERVING THAT LARGER UNI TS WERE ALSO CONSTRUCTED BY THE ASSESSEE, AT THE SAME TIME, IT IS ALSO A FACT ON RE CORD THAT THE ASSESSEE HAD CLAIMED DEDUCTION ONLY ON ACCOUNT OF SMALLER RESIDE NTIAL UNITS WHICH WERE FULFILLING ALL THE CONDITIONS AS CONTAINED IN S. 80 -IB(10) AND THE SAME HAS NOT BEEN DISPUTED BY THE AO ALSO. WE HAVE ALSO NOTED DOWN TH E FACT THAT EVEN THE PROVISION AS LAID DOWN IN S. 80-IB(10) AND THE SAME HAS NOT BEEN DISPUTED BY THE AO ALSO. WE HAVE ALSO NOTED DOWN THE FACT THAT EVEN THE PROVISION AS LAID DOWN IN S. 80-IB(10) DOES NOT SPEAK REGARDING SUCH DENIA L OF DEDUCTION IN CASE OF PROFIT FROM A HOUSING COMPLEX CONTAINING BOTH THE SMALLER AND LARGE RESIDENTIAL UNITS AND SINCE THE ASSESSEE HAS ONLY CLAIMED DEDUCTION O N ACCOUNT OF SMALLER QUALIFYING UNITS BY FULFILLING ALL THE CONDITIONS A S LAID DOWN UNDER S. 80-IB(10) THE DENIAL OF CLAIM BY THE ASSESSEE IS ON ACCOUNT OF RA THER RESTRICTED AND NARROW INTERPRETATION OF PROVISIONS OF CL. (C) OF S. 80-IB (1) WHILE COMING TO SUCH CONCLUSION, WE ALSO FIND SUPPORT FROM THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. (SUPRA), WHEREIN IT WAS HELD THAT PROVISIONS SHOULD BE INTERPRETED LIBERALLY AND SINCE IN THE PRESENT CASE ALSO, THE A SSESSEE BY CLAIMING PRO RATA INCOME ON QUALIFYING UNITS HAS COMPLIED WITH ALL TH E PROVISIONS AS CONTAINED IN THE SAID SECTION, IN OUR CONSIDERED OPINION, SUCH C LAIM OF THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LEARNED CIT(A) BY REVERSING THE ORDE R OF AO. 3.3.4 THE APPEAL FILED BEFORE HONBLE CALCUTTA HIGH COURT AGAINST THE TRIBUNALS JUDGMENT WAS DISMISSED VIDE ITA NO. 458 OF 2006. 3.3.5 IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD T HAT THE APPELLANT WAS ELIGIBLE FOR DEDUCTION U/S 80IB(10) IN RESPECT OF THE PROFITS OF TWO BLOCKS COMPRISING OF 128 FLATS AND THE ASSESSING OFFICER WAS NOT RIGHT IN DI SALLOWING THE SAID DEDUCTION. IT MAY ALSO BE MENTIONED THAT INSTRUCTION NO. 4/2009 O F CBDT QUOTED BY THE ASSESSING OFFICER IS APPLICABLE ONLY TO THE PROFITS DECLARED ON PARTIAL COMPLETION METHOD WHEREAS THE APPELLANT HAD CLAIMED DEDUCTION U/S 80IB(10) ON PROJECT COMPLETION METHOD AND SO THIS INSTRUCTION IS NOT AP PLICABLE TO THE APPELLANT. GROUND OF APPEAL NO. 2 IS ALLOWED. 6. AGGRIEVED BY THE SAME THE REVENUE HAS FILED PRES ENT APPEAL BEFORE US AND RAISING THE FOLLOWING GROUND : 1. THE LD. CIT(A) HAS ERRED IN FACTS AS WELL AS L AW IN DELETING THE DISALLOWANCE OF DEDUCTION U/S 80IB(10) MADE BY THE AO AS THE ASSESSEE FAILED TO COMPLETE THE WHOLE HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY WITHIN STIPULATED PERIOD OF FOUR YEARS. 5 7. BEFORE US THE LD. DR ARGUED THAT SECTION 80-IB(1 0) GRANTS DEDUCTION ON PROFITS OF HOUSING PROJECT WHICH FULFILL CERTAIN SP ECIFIED CONDITION WHICH SEEN IN THE ASSESSEES CASE OF HOUSING PROJECT COMPRISING O F FOUR BLOCKS OUT OF WHICH ONLY TWO BLOCKS WERE COMPLETED IN THE ASSESSMENT YE AR IT COULD NOT BE SAID THAT THE ENTIRE HOUSING PROJECT HAD BEEN COMPLETED AND T HEREFORE THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80-IB (10). THE LD. DR FURTHER PLACED RELIANCE ON INSTRUCTION NO. 4/2009 DT. 30/06/2009 O F THE CBDT WHICH STATED THAT IF THE PROJECT IS NOT COMPLETED IN TIME THEN DEDUCTION ALLOWED IN PRECEDING YEARS ON PARTIAL COMPLETION BASIS WILL BE WITHDRAWN. 8. THE LD. AR ON THE OTHER HAND RELIED ON THE ORDER OF LD. CIT(A). 9. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF PROFITS PERTAINING TO TWO BLOCKS OF BUILDING WHICH FULFILLED ALL CONDI TIONS PRESCRIBED BY SECTION 80IB(10) FOR CLAIMING DEDUCTION. THE ONLY ISSUE IS WHETHER HOUSING PROJECT CONTEMPLATED U/S 80IB(10) REFERRED TO THE ENTIRE PR OJECT OF 4 BLOCKS OF BUILDING OR WHETHER EACH BLOCK COULD BE INDIVIDUALLY TREATED AS A PROJECT. 10. ON AN IDENTICAL ISSUE, THE MUMBAI BENCH OF THE ITAT IN THE CASE OF MUDHIT MADANLAL GUPTA VS. ACIT(2011) 51DTR 0217 HELD AS UN DER: COMING TO THE SECOND OBJECTION RAISED BY THE REVENU E I.E., THAT THE ASSESSEE HAS NOT COMPLETED THE PROJECT. THIS OBJECTION IS RAISED ON THE BASIS THAT SINCE THE PROJECT CONSISTED OF FOUR WINGS I.E., A, B, C AND D AND SINCE COMPLETION CERTIFICATE HAS NOT BEEN FILED FOR D WING AND, THEREFORE, THE P ROJECT CANNOT BE SAID TO HAVE BEEN COMPLETED. THIS WOULD LEAD ONE TO THE QUESTION AS TO WHAT IS THE MEANING OF A HOUSING PROJECT. LEGISLATURE HAS NOT PROVIDED ANY DEFINITION OF THE HOUSING PROJECT AND, THEREFORE, THE DEFINITION HAS TO BE CO NSTRUED BY MAKING REFERENCE TO THE DICTIONARY AND AS LONG AS THE SEGREGATED BLOCKS ARE BEING ELIGIBLE FOR DEDUCTION UNDER S. 80-IB(10), THEN SAME SHALL BE CO NSTRUED AS ELIGIBLE HOUSING PROJECT AND DEDUCTION HAS TO BE ALLOWED ACCORDINGLY . THE HOUSING PROJECT DOES NOT NECESSARILY HAVE TO BE VARIOUS GROUP OF BUILDIN GS CONSTRUCTED ON A PARTICULAR LAND BUT IT CAN ALSO BE A PARTICULAR BUILDING OR AN Y BUILDING WHICH IS PART OF THE LARGE PROJECT. WHATEVER PORTION OF THE HOUSING PROJ ECT IS OTHERWISE FOUND TO BE ELIGIBLE HAS TO BE CONSIDERED AS A HOUSING PROJECT FOR THE PURPOSE OF DEDUCTION UNDER S. 80-IB(10) . 6 IN VIEW OF THE SAME THE LD. CIT(A) HAS CORRECTLY AP PRECIATED THE FACTS OF THE CASE AND HAS RIGHTLY COME TO THE CONCLUSION THAT EA CH BLOCK WAS TO BE TREATED AS A HOUSING PROJECT ENTITLING THE ASSESSEE TO CLAI M DEDUCTION OF PROFITS OF EACH BLOCK U/S 80 IB(10) OF THE ACT. WE THEREFORE HOLD T HAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION OF PROFITS U/S 80IB(10) TWO BLOCKS OF BUILDING COMPRISING OF 128 FLATS. 11. FOLLOWING THE ABOVE DISCUSSIONS WE DECIDE THIS ISSUE AGAINST THE REVENUE. 12. THE APPEAL OF THE REVENUE IS THEREFORE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 14/10/2015 SD/- SD/- (H.L. KARWA) (ANNAPURNA MEHROTRA) VICE PRESIDENT ACCOUNTANT MEMBER DATED :14/10/2015 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR