DCIT, New Delhi V. M/s. Padmini Infrastructure Development India Ltd., New Delhi

ITA 3807/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5641 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2002-2003
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Keywords: Rule of consistency; Question of law
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH . KULDIP SINGH , JM ITA NO. 3807 /DEL/2015 : ASSTT. YEAR : 2002 - 03 ITA NO. 3809 /DEL/2015 : ASSTT. YEAR : 2004 - 05 ITA NO. 3810 /DEL/2015 : ASSTT. YEAR : 2 005 - 06 ITA NO. 3811/DEL/2015 : ASSTT. YEAR : 2007 - 08 DCIT, CIRCLE - 19(2), NEW DELHI VS M/S PADMINI INFRASTRUCTURE DEVELOPMENT INDIA LTD., LG - 1 & R - 23, NEHRU PLACE, NEW DELHI - 110019 (APPELLANT) (RESPONDENT) PAN NO. AA ACP3561G ASSESSEE BY : NONE REVENUE BY : SMT. SHEFALI SWAROOP, CIT DR DATE OF HEARING : 20 .06 .201 8 DATE OF PRONOUNCEMENT : 20 . 06 .201 8 ORDER PER N. K. SAINI, AM : THESE FOUR APPEALS BY THE D EPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDER S EACH DATED 19.03 .2015 OF THE LD. CIT(A) - 7 , DELHI . 2. SINCE, THE ISSUES INVOLVED ARE COMMON AND THE APPEALS WERE HEARD TOGETHER, SO, THESE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVEN IENCE AND BREVITY. 3 . THE GROUNDS RAISED IN ITA NO. 3807/DEL/2015 FOR THE ASSESSMENT YEAR 2002 - 03 READ AS UNDER: 1. 'ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ALLOWING THE DEDUCTION U/S 80IB OF TH E IT ACT, 1961 AMOUNTING TO RS. ITA NOS. 3807, 3809 TO 3811 /DEL /201 5 PADMINI INFRASTRUCTURE DEVELOPMENT INDIA LTD. 2 70,97,621 / - , ALTHOUGH THE ASSESSEE COMPANY DID NOT MEET THE FOLLOWING CONDITIONS AS REQUIRED LAID DOWN U/S 80IB TO CLAIM SUCH DEDUCTION: - (I) THE UNDERTAKING IN QUESTION COMMENCED DEVELOPMENT OF THE ELIGIBLE HOUSING PROJECT ON OR AFTER 01.10.1998 AND; (II) THE RESIDENTIAL UNIT SHOULD HAVE A MAXIMUM BUILT UP ARE OF ONE THOUSAND SQ. FT. WHERE SUCH RESIDENTIAL UNIT IS SITUATED IN DELHI OR WITHIN TWENTY - FIVE KM FROM THE MUNICIPAL LIMIT OF DELHI (APP LICABLE IN THE CASE OF ASSES SEE) . 2. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUND OF APPEAL AND/ OR DELETE OR AMEND ANY OF THE GROUND OF APPEAL. 4 . SIMILAR GROUNDS HAVE BEEN RAISED IN OTHER APPEALS FOR THE ASSESSMENT YEARS 2004 - 05, 2005 - 06 AND 2007 - 08, THE ONLY DIFFE RENCE IS IN THE AMOUNT INVOLVED. 5 . DURING THE COURS E OF HEARING NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE, HOWEVER, EARLIER WHEN THE CASE WAS FIXED FOR HEARING ON 18.06.2018, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT AN IDENTICAL ISSUE FOR THE ASSE SSMENT YEAR 2006 - 07 HAS BEEN DECIDED BY THE ITAT DELHI BENCH F , NEW DELHI IN ASSESSEE S OWN CASE VIDE ORDER DATED 25.10.2017 IN ITA NO. 4065/DEL/2010. IT WAS FURTHER SUBMITTED THAT THE AFORESAID ORDER HAS BEEN CONFIRMED BY THE HON BLE JURISDICTIONAL HIGH COURT IN ITA NO. 586/2018 VIDE ORDER DATED 15.05.2018 (COPY OF THE SAID ORDERS WERE FURNISHED WHICH ARE PLACED ON RECORD). ON THE SAID DATE, THE CASE WAS ADJOURNED ON THE REQUEST OF THE LD. CIT DR FOR TODAY I.E. 20.06.2018 AND COPIES OF THE AFORESAID ORDE RS FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE WERE PROVIDED TO THE LD. CIT DR. ITA NOS. 3807, 3809 TO 3811 /DEL /201 5 PADMINI INFRASTRUCTURE DEVELOPMENT INDIA LTD. 3 6. DURING THE COURSE OF HEARING, T HE LD. CIT DR ALTHOUGH SUPPORTED THE IMPUGNED ORDER OF THE LD. CIT(A) BUT COULD NOT CONTROVERT THE AFORESAID FACTS EARLIER STATED BY THE LD . COUNSEL FOR THE ASSESSEE ON 18.06.2018. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER HAS FOLLOWED THE EARLIE R ORDER OF THE THEN LD. CIT(A) FOR THE ASSESSMENT YEAR 2006 - 07 WHICH WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL IN ITA NO. 4065/DEL/2010 WHEREIN THE ISSUE HAS BEEN DECIDED AGAINST THE DEPARTMENT AND IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 25.10.201 7 . THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 5 TO 5.3 WHICH READ AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ISSUE OF DATE OF COMMENCEMENT OF THE PROJECT IS CONCERNED, THE LD. FIRST APP ELLATE AUTHORITY HAS RECORDED A FINDING THAT NO DEVELOPMENT ACTIVITY WAS CARRIED ON BY THE ASSESSEE PRIOR TO THE APPOINTED DATE, THAT IS, 01/10/1998. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS TREATED THE DATE OF APPROVAL OF THE PROJECT BY THE NOIDA AUTHORITY, I.E., 03/09/1998 AS THE DATE OF COMMENCEMENT OF PROJECT. HOWEVER, THIS REASONING OF THE AO SEEMS ILLOGICAL AS GRANT OF APPROVAL DOES NOT NECESSARILY MEAN COMMENCEMENT OF DEVELOPMENT AND BUILDING ACTIVITIES. THE AO HAS NOT DEMONSTRATED WIT H CONCRETE EVIDENCE THAT THE ASSESSEE HAD IN FACT COMMENCED OPERATIONS RELATING TO DEVELOPMENT AND CONSTRUCTION PRIOR TO 01/10/1998. EVEN IN THE PROCEEDINGS BEFORE US, THE DEPARTMENT COULD NOT DEMONSTRATE THAT THE ASSESSEE HAD COMMENCED THE DEVELOPMENT AND CONSTRUCTION BEFORE THE APPOINTED DATE. IN SUCH A CIRCUMSTANCE WE ARE UNABLE TO CONCUR WITH THE INTERPRETATION OF THE AO ON THIS ISSUE. THE ITAT PUNE BENCH IN THE CASE OF NIMRITI CONSTRUCTION VERSUS DCIT IN ITA NO. 1389/PN/2003 REPORTED IN 95 TTJ 1117 HAS HELD THAT ACTIVITIES LIKE APPROVAL OF THE PLAN, MARKETING FOR BOOKING THE RESIDENTIAL UNITS, AVAILING OF FINANCE, RECEIPT OF ADVANCE BOOKING MONEY, ETC CANNOT BE CONSTRUED TO MEAN COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT. THE LD. CI T (APPEALS) HAS TAKEN NOTE OF THIS ORDER OF THE ITAT PUNE BENCH WHILE ALLOWING RELIEF TO THE ASSESSEE ON THIS ISSUE. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ADJUDICATION OF THE LD. ITA NOS. 3807, 3809 TO 3811 /DEL /201 5 PADMINI INFRASTRUCTURE DEVELOPMENT INDIA LTD. 4 CIT (APPEALS) ON THIS ISSUE AND WE DISMISS THE DEPARTM ENT S CHALLENGE ON THIS ISSUE. 5.1 AS FAR AS THE SECOND ISSUE BEFORE US IS CONCERNED, IT IS UNDISPUTED THAT THE BASIS FOR CALCULATION OF BUILT UP AREA HAS BEEN INSERTED IN THE ACT W.E.F. 01/04/2005 AND PRIOR TO THIS THE BUILT UP AREA WAS TO BE CONSIDERED AS PER THE GENERAL TERMS OF THE AGREEMENTS AND CERTIFICATES ISSUED BY THE ARCHITECTS. IT IS UNDISPUTED THAT THE PROJECT WAS COMPLETED IN THE YEAR 2001 AND AT THAT POINT OF TIME, THE DEFINITION OF BUILT UP AREA WAS NOT IN THE ACT. THE ASSESSEE HAD FURNISHED SALE DEEDS BEFORE THE AO WHERE IN THE BUILT UP AREA WAS LESS THAN 1000 FT.. THESE SALE DEEDS WERE NOT FOUND TO BE INCORRECT OR FABRICATED. THE SALE DEEDS HAVE BEEN SIGNED BOTH BY THE BUYERS AS WELL AS BY THE SELLER AND HAVE BEEN DULY WITNESSED. THE ASSES SEE HAS ALSO SUBMITTED CERTIFICATES FROM THE ARCHITECTS REGARDING THE TWO PROJECTS KINGSTON AND MONARCH WITH RESPECT TO THE BUILT UP AREA. THE AO WAS CALLED UPON BY THE LD. CIT (APPEALS) TO FURNISH REMAND REPORT IN RESPECT OF THE CERTIFICATES RELATING TO THESE TWO PROJECTS AND THE LD. CIT (APPEALS) HAS NOTED THAT IN THE REMAND REPORT THE AO HAS NOT DOUBTED THE GENUINENESS OF THESE CERTIFICATES. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAS BEEN GRANTED DEDUCTION UNDER SECTION 80 - IB (10) OF THE ACT F OR ASSESSMENT YEARS 2000 01 TO 2005 06 AND ASSESSMENT YEAR 2007 08. THERE HAS BEEN NO CHANGE IN FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION AND THERE BEING NO EVIDENCE TO THE CONTRARY, THE RULE OF CONSISTENCY REQUIRES THAT THE SETTLED POSITION SHOULD NOT BE DISTURBED. THE HON BLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VERSUS ARIF INDUSTRIES LTD (SUPRA) HAS ALSO HELD THAT THE INSERTION OF THE DEFINITION OF BUILT UP AREA WAS PROSPECTIVE IN NATURE. WHILE DOING SO, THE HON BLE HIGH COURT OF AL LAHABAD REFERRED TO THE JUDGMENT OF THE HON BLE APEX COURT RENDERED IN CIT VERSUS SARKAR BUILDERS (2015) 7 SCC 579 WHEREIN THE HON BLE APEX COURT WAS CONSIDERING THE APPLICABILITY OF SECTION 80 - IB (14) IN RESPECT OF PROJECTS WHICH WERE APPROVED BEFORE 01/0 4/2005. THE HON BLE ALLAHABAD HIGH COURT HAS NOTED THAT THE HON BLE APEX COURT HAS OPINED IN PARAGRAPH 25 OF THE JUDGMENT IN THE CASE OF SARKAR BUILDERS (SUPRA) THAT ONE CANNOT EXPECT AN ASSESSEE TO COMPLY WITH THE CONDITION THAT WAS NOT A PART OF THE STAT UTE WHEN THE HOUSING PROJECT WAS APPROVED. THE HON BLE APEX COURT FURTHER HELD THAT HOLDING CONTRARY WOULD LEAD TO ABSURD RESULTS AND THAT THE ONLY WAY TO RESOLVE THE ISSUE WOULD BE TO HOLD THAT CLAUSE (D) WAS TO BE TREATED AS BEING ITA NOS. 3807, 3809 TO 3811 /DEL /201 5 PADMINI INFRASTRUCTURE DEVELOPMENT INDIA LTD. 5 INEXTRICABLY LINKED WIT H THE APPROVAL AND CONSTRUCTION OF THE HOUSING PROJECT AND THAT AN ASSESSEE CANNOT BE CALLED UPON TO COMPLY WITH THE SAID CONDITION WHEN IT WAS NOT IN CONTEMPLATION EITHER OF THE ASSESSEE OR EVEN THE LEGISLATURE WHEN THE HOUSING PROJECT WAS ACCORDED APPROV AL BY THE LOCAL AUTHORITIES. 5.2 THEREFORE, RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGMENTS OF THE HON BLE APEX COURT IN THE CASE OF SARKAR BUILDERS (SUPRA) AS WELL AS OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF ARIF INDUSTRIES LTD (SUPRA) WE FIN D NO REASON TO INTERFERE WITH THE ADJUDICATION OF THE LD. CIT (APPEALS) ON THIS ISSUE ALSO. 5.3 GROUND NO. 5 OF THE APPEAL MENTIONS THAT THE DEDUCTION UNDER SECTION 80 - IB OF THE ACT WAS DISALLOWED IN THE ASSESSEE S CASE IN ASSESSMENT YEAR 2002 03, 2003 04 , 2004 05, 2005 06 AND 2007 08. HOWEVER, THIS ASSERTION IS FACTUALLY INCORRECT AND THE SAME IS DISMISSED AS INVALID. 8. THE AFORESAID REFERRED TO ORDER DATED 25.10.2017 PASSED BY THE ITAT DELHI BENCH F , NEW DELHI IN ASSESSEE S OWN CASE FOR THE ASSESSME NT YEAR 2006 - 07 WAS A SUBJECT MATTER OF THE APPEAL BEFORE THE HON BLE JURISDICTIONAL HIGH COURT U/S 26 0 A OF THE INCOME TAX ACT, 1961 BY THE DEPARTMENT IN ITA NO. 586/2018 WHEREIN VIDE ORDER DATED 15.05.2018, IT HAS BEEN HELD AS UNDER: IN RESPECT OF THE FI RST QUESTION, THE CIT(A) WITH CONCURRENT FINDINGS WAS OF THE VIEW THAT THE BALCONIES RAISED COULD NOT BE TAKEN INTO ACCOUNT FOR CALCULATING 1000 SQ.FT. LIMIT PRIOR TO 01.04.2005. THIS COURT FINDS NO REASON TO INTERFERE WITH SUCH LOGIC. AS FAR AS THE SECO ND ISSUE WITH RESPECT TO THE COMMENCEMENT OF THE PROJECT IS CONCERNED, AGAIN WE FIND THAT THE CONCURRENT FINDINGS ARE BASED UPON THE ACTUAL COMMENCEMENT OF THE PROJECT. THOUGH, THE REVENUE URGED THAT THE DATE OF APPROVAL IS DETERMINATIVE AND COMMENCEMENT H AS TO BE RECKONED FROM THAT PERIOD, THIS COURT IS OF THE OPINION THAT THE ITAT CANNOT BE FAULTED ON THIS ASPECT FOR THE SIMPLE REASON THAT MERE SECURING THE APPROVAL DOES NOT LEAD TO ANY STEP TOWARDS DEVELOPMENT. RATHER THAT MAY BE THE FOUNDATION FOR VARIO US STEPS THAT MAY ULTIMATELY LEAD TO OBTAIN FINANCES AND STARTING CONSTRUCTION ACTIVITY. THEREFORE, IT IS THE ACTUAL DATE OF CONSTRUCTION WHICH IS DETERMINATIVE. ITA NOS. 3807, 3809 TO 3811 /DEL /201 5 PADMINI INFRASTRUCTURE DEVELOPMENT INDIA LTD. 6 FOR THE FOREGOING REASONS, NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS DISMISSED. 9. WE, THEREFORE, BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDERS, DO NOT SEE ANY MERIT IN THESE APPEALS OF THE DEPARTMENT. 10 . IN THE RESULT, THE APPEAL S OF THE DEPARTMENT ARE DISMISSED. (ORD E R PRONOUNCED IN T HE COURT ON 20 /06 /2018 ) SD/ - SD/ - ( KULDIP SINGH ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 20 /06 /2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT R EGISTRAR